2017...The year to remortgage?
Michelle Niziol, Director of IMS Independent Mortgage Solutions
Many households have seen a squeeze on income and spending since the credit crunch, with the need to budget and make savings ever more apparent, and with interest rates at low levels, the number of people remortgaging their homes has steadily increased.
Figures from the Council of Mortgage Lenders showed gross remortgaging had risen to £6.1 billion in October 2016, the highest monthly figure since January 2009.
We expect the remortgage market to continue to grow this year, as more consumers understand the benefits of switching and the potential savings to be had. I would always suggest speaking to a mortgage broker about what your options are – they are typically able to view mortgages from the whole of the market and will know if your personal circumstances and affordability suit another lender’s criteria better than your current lender.
When a client comes to see us, we always look at what their current lender will offer them compared to the whole market. We will discuss the options with the client and let them know what the most cost effective deal is. Certainly, if you are currently on your lender’s standard variable rate you should look to see if you can get a better deal elsewhere. Most lenders offer free valuation and legal fees for customers who are taking out a remortgage, which is an added bonus.
It’s important to take into account your personal circumstances both now and what they may be in the near future as this will determine whether you are eligible to remortgage and if so, what type of mortgage is right for you. Your personal circumstances are likely to have changed since you took out your mortgage – your employment status may be different, you may be earning more, your property may have increased in value.
If you are no longer in employment you may find it harder to get a mortgage with another lender – lenders’ criteria have become much stricter over recent years due to the implementation of new regulations. This is ultimately to safeguard borrowers from an increase in interest rates and ensure you can afford your mortgage, but this may mean that, based on a new affordability score, a lender won’t approve your application.
If you are planning to move home in the near future it is often beneficial to get a flexible mortgage. A flexible mortgage is a normal mortgage but with extra flexible features, such as the ability to make overpayments, the ability to arrange a payment holiday, or port your mortgage to another property.
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