Mortgage: A ‘flurry’ of remortgaging may emerge as products expire – could you save money?
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Mortgage holders may have the option to remortgage which, in basic terms, allow people to look to move from one deal to another. This can be done with the existing lender or a new one and new analysis shows that it could be worth doing in the current environment.
LMS, the financial services company, release a “monthly remortgage snapshot” which analyses the remortgage market and the customers within it.
This snapshot found that for August average monthly payments decreased for those who remortgaged by £200.76.
Nick Chadbourne, the CEO of LMS, provided the following comments along with the findings: “Activity levels dropped off across all major indicators in August this year, mainly driven by a focus from all stakeholders on the home-moving market as borrowers look to make the most of the temporary stamp duty changes.
“We also have a spike of product expiries at the end of the year rather than the usual October increase.
“This may lead to a flurry of remortgage activity towards the end of the year as borrowers look to secure a new fixed rate deal.
“It will be the continued development and adoption of security and tech solutions that will be key in helping brokers and lenders manage the spikes in activity come the end of the year.
“Taking a deeper look into customer borrowing habits, it is promising to see that half of borrowers who chose to remortgage in August saw a significant decrease of just over £200 in their monthly payments.
“This comes as lenders continue to offer attractively priced fixed-rate packages as they pass their lower borrowing costs onto customers.
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“This will come as a welcome relief to borrowers looking to remortgage to reduce outgoings as the economic uncertainty caused by COVID-19 continues, and the end of many government support schemes come into sight.”
Similar savings were found at Trussle, the online mortgage broker.
Miles Robinson, the Head of Mortgages at Trussle, noted: “For existing homeowners, now could also be a good time to think about remortgaging. Our customers save £334 on average per month by remortgaging onto a fixed rate, so it’s worth using a remortgage calculator to see if switching could save you money.
“Any aspiring or existing homeowners who are considering taking a mortgage payment holiday should seek professional advice as soon as possible to discuss their options.”
Mortgage rules can be complicated as it is and many people may not know where to start with remortgaging but fortunately help is at hand.
Brian Murphy, the head of lending at the Mortgage Advice Bureau, urged savers to “get yourself mortgage ready”.
This will involve stress tests, as he explained: “When applying for a mortgage or when remortgaging, the lender will ‘stress test’ your affordability to see if your finances are in order.
“This will determine whether you’re able to afford the repayments, alongside any other financial commitments you may have, and ultimately make sure you have a mortgage you can afford.
“The tests will include a look at your income vs your expenditure, so it’s important that you’re able to show you are capable of keeping your finances in order.
“If you can get yourself as mortgage ready as possible (around six months prior to you needing a mortgage) then when the time finally comes, you will be in a stronger position and your mortgage could go through much quicker.”
These organisations offer undoubtedly useful guidance for mortgage holders but it should be remembered that additional support can be found online.
Impartial advice can be sought for free from the likes of Citizens Advice, the Money Advice Service or the Money and Pensions service.
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