After the Coronavirus pandemic began in the UK in March 2020, The Bank of England cut its interest to 0.1% to support the economy, and the rate has not yet moved from this historic low. Over recent months, we have seen very low mortgage interest rates being oﬀered to borrowers who own at least 35% or more of the value of their home. This means for some people, remortgaging now could mean lower mortgage repayments and longer-term financial savings.
The spread of the virus continues to bring uncertainty about our financial future, job losses and potential falls in UK house prices. Lenders are reacting by focusing on securing mortgage business from the lowest risk applicants. This means attracting existing borrowers who have a proven track record of making regular mortgage payments and who have either a large deposit or equity already in their property.
Banks and mortgage lenders are competing aggressively for remortgage business, and this has pushed down the interest rates on mortgages with at least 65% loan to value, which means those who own at least 35% or more of their property. Those who have held their mortgage for a number of years and have equity in their property should compare their existing interest rate to see if they could save money by moving their mortgage to a new deal.
For a home owner looking to remortgage with a 35% deposit (65% loan-to-value mortgage), the website moneyfacts.co.uk states the best five-year fixed rate mortgage currently stands at 1.29%. The most competitive rates are being oﬀered to those with a 40% or more deposit, with a two-year fixed rate mortgage rate available as low as 1.14%.
Whilst the diﬀerence of a percentage point may not seem much, on a £300,000 repayment mortgage over 25 years, an interest rate of 3% means mortgage repayments of £1,422.63 a month and a total of £126,790 in interest paid over the lifetime of the loan. If the interest rate is reduced to 2%, repayments drop to £1,271.56, and a total of £81,468.90 is paid in interest. This cost diﬀerence is why it is so important to make sure you keep a watchful eye on the interest rate you pay on your loan.
Moving your mortgage to a new lender oﬀering a lower interest rate does not mean you have to move house or borrow more money. You can simply move the existing debt and take advantage of lower repayments.
Borrowers looking to gets quotes for a new mortgage are likely to find things easier if they seek advice from an independent financial adviser, and at Furnley House we are here to help. Our team of qualified advisers will use their knowledge to provide you with comparison mortgage repayment quotes, as well as highlight any lenders fees, legal or conveyancing fees and factor these into the comparison figures. They will help you find the best deal for your circumstances and help you to decide if it will benefit you to move your mortgage.
To speak to one of our Furnley House advisers to talk about mortgages, call 0116 269 6311 to get a no obligation quote or email email@example.com.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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