2020 has been a year no one could have predicted, and despite much financial uncertainty, now could still be a great time to remortgage your home. The Bank of England cut their interest rates to a record breaking low of just 0.10% back in March, which may see many mortgage payments lower drastically for many. If you are not sure what type of mortgage you currently have, be it SVR, tracker, fixed rate or variable, or are simply unsure of the best ways to look for a better deal, here are a few key factors to keep in mind when looking to remortgage your home in 2020.
Know Your Current Rate
More than 70% of home owners are current on the SVR or standard variable rate mortgage offered by their lender. This means that if the Bank of England’s interest rate rises, then that will be reflected on your mortgage repayments too. Some standard variable rate mortgages are more competitive than others, ensuring to never rise more than 2% above the base interest rate, but this is not the case for all lenders, so be sure to check the terms and conditions of your current mortgage if you are unsure. If you are on a fixed rate mortgage, you will be used to the peace of mind obtained by knowing exactly what is due to be paid every month. However, just because your rate is fixed, that doesn’t mean that you couldn’t still be taking advantage of a better deal. After all, when the fixed rate comes to an end, your lender will most likely switch you to their standard variable rate. Tracker mortgages will always follow the Bank of England base rate, as will variable mortgages, so be sure to check which kind of mortgage you currently have before deciding on your best remortgage options.
Early Exit Fees and Penalties
Before starting to shop around for remortgage options, it is first and foremost important that you check with your current lender that leaving your current deal with them will not incur any early exit fees or other penalties. Although this does not necessarily mean you cannot decide to remortgage if you want to, it just may mean that you suffer a financial blow in order to be released from the mortgage with your current provider. This may see you losing money, so always check this first as it may mean remortgaging is not the best option for you.
Once you have ascertained the pros and cons of leaving your current provider, the best step is to use a remortgage calculator. There are plenty available online, and these simple and easy to use sites enable you to see at a glance how much money you could be saving by remortgaging. All you need to do to see how much less you could be paying a month is provide a few key details. Input the current property price, amount left on your mortgage, your monthly payments and how many years are left on the mortgage and sites such as propertypriceadvice.co.uk/remortgaging-calculator can instantly show you what better deals are out there for you to explore. Best of all, the whole process can be done online, making it particularly convenient during the current coronavirus restrictions.
Why Remortgage Now?
With so much financial uncertainty, many may be worried about the long term impact on their ability to keep up with mortgage repayments. As the Bank of England’s interest rate is currently so low due to emergency coronavirus measures, now is in fact the perfect time to take advantage of these lowered rates. By remortgaging now, you can choose a fixed term mortgage rate that allows you to take advantage of this lowered rate before it will inevitability rise again. Remortgaging to a lower rate for a fixed term also gives you peace of mind, knowing exactly what your payments with be each month for a fixed period. This can be anything from one year to up to ten years, depending on what rates your lender is able to offer. However, a word of caution. With so many people rushing to take up these drastically lowered interest rate mortgages, each lender will only be able to offer a specific amount before it is no longer tenable for them to do so. Therefore, if you are thinking about remortgaging, now is the time to do it, as if you leave it too long, you may be one of the unlucky ones who misses out on a potentially great deal.