How do you know when is the best time to remortgage?

Steven Boyde shares his views as interest rates look set to rise…

Every cloud has a silver lining. When the housing market’s bubble burst in 2007, along with the general worldwide economy, the British government decided to lower interest rates in a bid to slowly rebuild the economy. In the space of 11 months interest rates fell from 5% to an unprecedented low of 0.5% where they have remained ever since. The silver lining was for those of us who, at the time, or subsequently, had set their mortgage to ‘track’ the England Base rate or Libor benefiting from reduced mortgage payments. Banks also reduced their Standard Variable Rates (SVR’s) so if your product was then linked to the bank’s SVR, your rate and monthly payments remained low.

Since then…

If you have been in a position to do it – borrowing money has been very cheap. But with the economy starting to show signs of recovering we are now set to see interest rates rise over the coming months we will soon see a shift in mortgage products to coincide with the rate increases. Savvy homeowners and investors are now looking to remortgage onto fixed products before interest rate rises come in to force. It is likely lenders will react immediately to any interest rate increases and the mortgage products available at the moment will be gone for the foreseeable future. Therefore, to answer the question when is the best time to remortgage, I would say right now to capitalize on existing rates before the industry rates start moving again.

If you are one of those lucky (or smart) enough to have a mortgage product connected to the Bank of England base rate, Libor rate or a bank’s SVR it may be worth working out how much your payments will be when you add 2-3% to your mortgage payment. For example, if you currently have a £500k mortgage and are paying a 2% interest rate, your monthly interest payments are  £833. A 2% increase will see your monthly mortgage payments double to £1666. Will these payments still be affordable to you? When is the best time to remortgage you ask? Right now.

Enness Private Clients are a wholly independent company with access to any mortgage in the UK market. We have fantastic relationships with high street lenders, private banks and offshore lenders. We currently have 2 year fixed products under 2 % and 4 year products under 3%.

To find out how you could benefit from remortgaging now to secure a low rate  for the next 2 – 5 years before interest rates and mortgage products start to increase please get in touch with steven@ennessprivate.co.uk or call 0203 758 9378.



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