Now is a great time for anyone who wants to remortgage their property. Rates have plummeted in recent years, so that in many cases they are under 2%, and in some circumstances you can get an interest rate of less than 1%. For those sitting on older, more expensive mortgages, and those on their lender’s standard variable rate, this is an opportunity to see whether you can save money by remortgaging.
In association with HSBC, we examine the five reasons why you might want to consider it.
1. Rates are low
Rates are at historic lows at the moment – and for those with a little more equity in their property, the available deals are at rock bottom. HSBC, for example, has a range of mortgages with competitive rates for people with 40% or more equity in their home. If you're in the market to purchase a property, there is also a great £1500 cashback deal for HSBC Advance Bank Account customers on their Homebuyer Special mortgages*.
When you are calculating whether you can save by remortgaging, you need to factor in all the fees and charges associated with the switch, but with such attractive rates on offer in the market at present, there’s a good chance that many people could stand to save substantially even after taking these into consideration.
2. You might decide to fix your interest rate
There has been a great deal of talk about the possibility of rising interest rates. These things are notoriously hard to predict, and even the Bank of England is constantly reviewing its projections for when rates are likely to rise. However, with rates now at historic lows, at some point in the future, there is every likelihood that they will increase.
What tends to happen is that when there is a risk of rising rates, fixed rate mortgages tend to get more expensive, to take account of that risk. At the moment this isn’t happening, because there are some concerns about the possibility of deflation, and the chance that the Bank of England may end up leaving rates where they are for a while – or even cutting them.
It means that if you are concerned about rates rising over the slightly longer term, it provides an opportunity to lock into a rate that remains the same every month even if the interest rates change.
3. You might want to free up a lump sum
Getting a cheaper deal is only one of the reasons for remortgaging: in many cases homeowners will want to free up a lump sum. If you have plenty of equity in your home, and are in need of an injection of cash to improve your property, meet unexpected costs, or adapt to life events, then a remortgage is clearly a key consideration.
If you are in need of a lump sum, then the current crop of competitive deals offers the chance for you to free up some equity, without it increasing your monthly mortgage payments as much as it would have done previously.
4. It’s not necessarily as difficult as you think
Mortgage companies have adapted, so you can choose the route to remortgaging that’s right for you. If you would like face-to-face assistance through a mortgage company, then there are often in-house advisors you can use. At HSBC, for example, you will be given a named advisor, who you can contact directly via phone or email or see in a branch whenever you have any queries about any of their products.
If you don’t need help at all, then HSBC offers the opportunity to complete the remortgage journey fully online with their new HOME system.
5. You could end up with better service as well as a better deal
All mortgage lenders are not the same, and it’s not just interest rates where they differ. There are a number of independent awards that help identify those companies that offer the best mortgages and services – both for remortgaging and more generally.
So far this year, for example, HSBC has won the Moneyfacts award for the Best Provider for Remortgages, the Moneysupermarket Remortgage Buyers Choice and the Moneynet Personal Finance Best Overall Mortgage Provider award. So it pays to check what others think of the company you are planning to switch to.
Of course, remortgaging is not right for everyone. You may be tied into an existing deal, so that the early repayment charges wipe out any potential savings. Your circumstances may also have changed – making it difficult for you to borrow as much as you want, as cheaply as you’d like. It means that before you consider remortgaging you need to think carefully about your own circumstances. However, for those who are in a position to remortgage, there has never been a better time to at least see what you could save.
Your home may be repossessed if you do not keep up repayments on your mortgage
*Available to HSBC Advance and HSBC Premier customers (financial and other eligibility criteria apply) on the Homebuyer Specials range of fixed rate mortgages. Residential home purchase applications only. Available up to 95% loan to value (LTV). Minimum loan size is £75,000 excluding any existing borrowing. A maximum loan size may also apply. An upfront booking fee of £199 applies and other fees and charges may be payable. An Early Repayment Charge applies during the fixed rate period. Cashback will be paid within 40 calendar days of receipt of your first monthly payment. This offer is limited to one application per property. HSBC reserve the right to withdraw this offer at any time without notice.