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    So your current mortgage deal is coming to an end and you are wondering when is the best time to start your remortgage journey. People remortgage their homes to find a new mortgage rates that better matches their current needs, whether that means lower monthly payments, better interest rates, or releasing property equity for extra funds.

    Our guide highlights the importance of timing in the remortgage process, specifically advising when to remortgage before your existing mortgage deal concludes. This strategic timing ensures you have ample opportunity to explore and secure the most beneficial rates and deals. We aim to support you with both professional insight and personal warmth, keeping you well-informed and confident in your remortgage journey.

    When Should I Remortgage?

    Beginning your remortgage process 4 to 6 months before the end of your current mortgage rate is recommended. If your mortgage situation is straightforward, starting at the 4-month mark should provide enough time. Individual circumstances vary and your timeline could depend on factors like finding a better rate, funding home improvements, or consolidating debt. Consulting a mortgage broker six months in advance can give them enough time to plan a remortgage tailored specifically to your unique financial goals and needs. Having an initial chat with a broker will allow professional insight, helping you to optimise your mortgage renewal.

    Related reading: Can you remortgage early?

    should i remortgage now or wait

    Should I Remortgage Now or Wait?

    Deciding on the right time to remortgage hinges on your current mortgage details, financial health, and evolving interest rates.

    As we move through 2024, the Bank of England’s base rate is at a 16-year high of 5.25%. Despite this, market forecasts suggest a downtrend, predicting rates to dip below 4% by mid-2025 and further to 3.3% by 2028’s end. For those eyeing the potential rise in monthly payments, fixing your mortgage rate soon could be wise. If you’re unsure, consider securing a mortgage offer now, with the option to complete in the next 6 months. – Steve Roberts (Founder of YesCanDo Money)

    Remember, these are broad guidelines. For advice tailored to your situation, consulting with a financial advisor or mortgage broker is recommended.

    Switching To Your Lender’s Standard Variable Rate (SVR)

    When the term of your promotional or fixed-rate mortgage ends without a follow-up deal, you’re automatically placed on your lender’s Standard Variable Rate (SVR). This rate is usually significantly higher than your initial deal, leading to an unexpected increase in your monthly mortgage repayments. Being on an SVR means you could be paying more than necessary, especially when alternative, more cost-effective mortgage options are available in the market. It’s a common situation that many homeowners find themselves in, primarily due to a lack of research or the daunting prospect of navigating through countless mortgage deals.

    • Higher Costs: SVRs are usually at least 2% higher than promotional rates, leading to increased monthly repayments.
    • Current Trends: In 2024 SVRs are averaging around 7%, compared to the much lower promotional rates available, it’s a clear financial disadvantage to remain on an SVR.

    Real-World Example: Let’s say you were on a 5 year fixed mortgage with a 3.5% interest rate and your current deal comes to an end. Moving to an SVR of 7% on a £300,000 mortgage will significantly increase your monthly repayments. Specifically, you’ll see a jump from £1,501.87 to £2,120.34, which is an increase of £618.47 monthly. Annually, this means paying an extra £7,421.60. This example underscores the importance of securing a new mortgage deal before your current one ends, to avoid such a steep rise in costs.

    Avoiding Early Repayment Charges (ERC)

    Early Repayment Charges (ERC) are fees levied by lenders if you decide to pay off your mortgage or switch to a new deal before the end of your current mortgage term. The average ERC is typically calculated as a percentage of the outstanding mortgage balance, usually ranging between 1% and 5%. The exact amount, however, can differ based on several factors, including the size of your mortgage and how far into your mortgage term you are. It’s crucial to remember that these percentages are general estimates, and the actual charges can vary according to your specific mortgage agreement and the lender’s policies. Always consult your mortgage agreement or speak directly with your lender to get accurate information about potential charges.

    • ERC Range: Typically between 1% and 5% of the outstanding mortgage balance.
    • Factors Influencing ERC: Amount borrowed and the length of time into your mortgage deal.
    • Variability: Exact ERCs can vary based on your mortgage agreement and lender.
    • Importance of Verification: Check your mortgage terms or consult with your lender for precise early repayment charge details.

    By understanding the potential impact of Early Repayment Charges, you can make more informed decisions about whether and when it might be beneficial to remortgage or pay off your mortgage early. Keep in mind the importance of checking the specific terms of your mortgage agreement for the most accurate information regarding ERCs.

    How Long Should I Remortgage For?

    Finding the appropriate mortgage deal length is a critical decision that affects both financial stability and flexibility. Length not only impacts interest rate but also your ability to adapt to life changes without incurring extra costs. Longer fixed-rate deals provide monthly payment stability by protecting against interest rate fluctuations in the market, but if moving homes or early payment is an option, opting for one with portability or flexible early repayment terms is ideal.

    • Term Lengths for Stability vs. Flexibility: Longer terms (typically 5 years) provide payment stability, whereas shorter terms (usually 2 or 3 years) offer greater flexibility to adapt to changing circumstances or take advantage of future lower rates.
    • Interest Rate Considerations: Securing a mortgage with a low rate now, especially given the current market conditions, can protect you from the impact of future rate increases. This strategy is particularly beneficial for longer fixed-rate terms.
    • Portability for Future Moves: If there’s a chance you’ll move within the term of your mortgage, consider a portable mortgage. This feature allows you to transfer your mortgage to a new property without facing significant penalties, offering a blend of stability and flexibility ideal for those with uncertain future housing plans.

    By carefully weighing these considerations, you can choose a mortgage term that aligns with your financial goals and lifestyle needs, ensuring you’re prepared for both the expected and the unexpected.

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    Securing the Best Remortgage Deals

    Unlocking the best remortgage deals is simpler than you might think, and often begins with a conversation with a “whole of market” mortgage broker. These experts have the tools and knowledge to compare a wide array of mortgages available, especially for first-time buyers, ensuring you find a deal that fits your financial situation snugly. Brokers also have access to exclusive mortgage deals directly from lenders, which might not be available to you otherwise.

    Understanding Your Loan to Value (LTV)

    Loan to Value (LTV) ratio is at the heart of every mortgage deal; it connects your borrowing amount and your property’s current market value and ultimately determines what interest rates lenders offer you. A lower LTV could unlock lower rates when remortgaging, similar to how a larger deposit ensured better rates when buying your first home. This means if your home has increased in value since your current mortgage started, your equity would have increased resulting in better rates of interest being available to you when you remortgage.

    A real-life example of loan to value and equity:

    Imagine buying a £250,000 property with only a £25,000 deposit and borrowing £225,000 at first; that would give you a 90% loan-to-value ratio (LTV). After its value increased to £300,000 and repayments totaling £10,000 of your original mortgage were completed, your equity (deposit, repayments, and increase in property value) now totals £85,000. At 72% LTV, your chances of finding more attractive remortgage rates improve considerably; further decreasing it with savings could yield even better rates.

    Finding the right remortgage deal is about understanding your position and leveraging it for the best outcome. With some research and the right advice, you’re well-equipped to navigate this process successfully.

    Should I Remortgage with My Existing Lender or Switch?

    We don’t blame you for thinking that it would be easiest to stay where you are and stick with your current mortgage deal. It may sound a bit of a nightmare to switch, however, your existing lender will rely on you feeling as if it all seems too much to leave them. They will offer you a rate that seems like a great fixed-rate deal but probably isn’t.

    With over 14,000 different mortgage interest rates and deals in the UK mortgage market, don’t assume it makes sense to remortgage with the same lender that you have been with for the last few years. You could lose thousands of pounds by staying and settling for a poor interest rate and current deal. Now is the time to get a new mortgage deal and very likely a cheaper mortgage deal!

    Staying with Your Current Lender

    Choosing to renew your mortgage with your current lender may initially seem like the path of least resistance. This option can offer the convenience of not having to undergo another application process, potentially saving time and effort. Your existing lender might also present exclusive loyalty rates, making it appear as a financially sound decision at first glance. However, these offers may not always represent the best value available on the market. It’s important to critically assess the terms being offered by your current lender:

    • Convenience and familiarity with processes and personnel.
    • Potential for loyalty discounts or exclusive rates.
    • Avoiding the need for a new application and valuation process.

    Switching to a New Lender

    On the other hand, exploring new lending opportunities can unveil deals that significantly undercut your current lender’s offer, both in terms of interest rates and overall terms. Switching lenders can open up access to competitive market rates, flexible repayment options, and mortgage products that better suit your current financial situation and future goals. While the process may involve more upfront work, including applications and potentially valuation fees, the long-term financial benefits can be substantial:

    • Access to lower rates of interest and better overall mortgage terms.
    • Opportunity to find a mortgage product that aligns more closely with your financial goals.
    • Potential long-term savings that outweigh the initial inconvenience and costs of switching.

    Before making a decision, it’s wise to conduct a comprehensive comparison of the market, possibly with the assistance of a mortgage advisor. This approach ensures you are fully informed about your options, empowering you to make a choice that best serves your financial health and future.

    Simplifying Your Remortgage with a Mortgage Broker

    Knowing how to remortgage and when the best time and deal for a remortgage can be tricky. A mortgage broker simplifies this process, offering expertise and access to deals you might not find on your own. Here’s why considering a broker could be beneficial:

    • Expertise: They review your current mortgage and align it with your financial goals.
    • Rate Comparison: Brokers compare rates across lenders to find the best deal for you.
    • Stress Reduction: They handle the complexities of remortgaging, saving you time and effort.

    Fee Free Mortgage Advice from YesCanDo Money

    YesCanDo Money is a fee-free, whole-of-market mortgage broker offering:

    • No Charge: Our expert mortgage service is free across the UK.
    • Personalised Service: Whether it’s a digital meeting or a phone call, we cater to your preferences.
    • Comprehensive Support: We will compare mortgage deals avoiding early repayment charges then take care of the mortgage application and liaise with conveyancers, we cover it all.
    • Convenient Communication: Updates and discussions are made easy with WhatsApp.

    Let YesCanDo Money streamline your remortgage process. Our team of experienced advisers is here to ensure you get a great deal without the hassle.

    Frequently Asked Questions

    Start considering a remortgage 3 to 6 months before your deal ends. This is the same for both a repayment mortgage and an interest-only mortgage. Consulting with a mortgage broker can offer personalised timing advice.

    Begin the remortgage process now if your deal expires within six months. A broker can help navigate current rates and future predictions.

    Choosing between 2 or 5 years depends on personal needs. Five-year terms usually offer stability. A broker can guide this decision based on current economic indicators.

    Remortgaging early may incur ERCs, especially with significant debt. Discuss with a mortgage broker whether to wait or proceed based on your financial situation.

    Initiate remortgaging about 6 months before your current deal ends. A mortgage expert can help ensure a seamless transition to a better rate.

    This choice hinges on your circumstances and market climate. A mortgage broker can provide insights into which term aligns with your financial goals.

    The appropriateness of remortgaging now depends on your unique circumstances and market trends. Consult a mortgage broker to evaluate if it's the right time for you.

    Predictions suggest a gradual decline in rates after Autumn 2024. A mortgage broker can offer updated advice and strategies based on the latest market forecasts.

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    Jane Rowe (CII)
    Jane Rowe (CII)

    Jane (CII) is an outstanding Mortgage & Protection Adviser at YesCanDo Money. Boasting decades of industry expertise and an overwhelming passion for client care, she excels at guiding her clients whether they're making their first steps onto the property ladder, moving homes or exploring buy-to-let opportunities. Jane stands out as a true professional by finding the best solutions and prioritising client financial security first and foremost.

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