There has never been a more applicable time to see a professional mortgage advisor. With the markets newfound turbulence and lenders being increasingly sceptical, having someone to help navigate this is key. Lending criteria and policies are changing on a weekly basis and are adapting at a faster rate than we have ever seen. On top of this, products from the banks are also changing and evolving more frequently than usual.
With this sort of turbulence in the market, it can be tough to know exactly who is best and where to find the right deal for you. Let’s take a look specifically at the remortgage marketplace. Currently, it’s the best time to remortgage in certain situations than it has ever been. If you have a lot of equity in your home, otherwise known as loan to value, you could benefit from the lowest rates we’ve ever seen in the UK mortgage marketplace.
The Impact of COVID-19
Due to the COVID pandemic the Bank of England lowered its base rate to 0.1%. This is the lowest it’s been in the banks history. This means that the big banks can borrow money off the Bank of England at a low rate and then re-lend it out to clients. So in turn, the lower this rate is, the lower your rate is. On top of this a lot of tracker and variable rates are based off the base rate.
The reason they have lowered the rate so low is to stimulate borrowing and therefore activity in the economy. COVID brought about economic uncertainty and a huge dip that the government and banks are working to correct.
This means that if you have a property already, you could really benefit from a fantastic new fixed rate. Remortgaging clients generally are lower risks as they have the great credit from already having a mortgage, experience of owning a property and the history of making payments on a mortgage. On top of this they have paid off equity in the property so can often have more leeway between the property value and the mortgage balance.
But do not be completely confident. We all know that getting a mortgage can be tough as it is. But having takes some maintenance. Whilst it does put you in a better position to the banks, it’s important to keep the mortgage payments up to day and also make sure your credit report and overall credit health stay good.
With this equity, the lenders view you at less risk. Because if there was a crash in the market and the property value went down, that equity means that you are less likely to end up underwater. What do I mean by underwater? I mean having more mortgage balance than actual property value. This would be terrible for the lenders because if it came to repossessing your property, they would make a loss and lose out on their money.
So the more equity the better as it’s a safer bet for banks. This means you benefit from better and better interest rates with the more equity you build up over time. With rates in the lowest band around 1%, this means fantastic opportunities to secure a long term rate and pay as little as you can in interest going forward and more on paying back capital.
Summary
With rates this low it can be a great time to tie a rate up for the longer term. If you don’t see yourself moving property and want to really lock in the security of a longer term fixed rate, a five year or longer fixed could be a great idea. And there has never been a better time to do this given the current interest rates. So, now is definitely the time to find yourself a trusted independent financial advisor and look over your mortgaging options.