Firstly, apologies, I think we’re all well and truly sick of the dreaded “B” word and all of the potential upheaval it could bring to our day to day lives. At the time of writing the outcome of negotiations remains uncertain, but media rumours of possible outcomes and their consequences prevail.
So, what does all of this mean for interest rates and the mortgage world? To be completely honest, if I knew when / how much by / the direction of future interest rates changes, I would have a much more lucrative career than advising on mortgages!
However, I can assist in covering off some of the risks of increasing mortgage interest rates and their effects on mortgage payments, which I feel is particularly important for most people’s largest monthly outgoing.
At the present time one of the strange by-products of all of the political and economic uncertainty is that the mortgage products currently available are extremely competitive. 5 year fixed rates seem particularly so, with many of my clients commenting on how the gap between these rates and the traditionally much cheaper 2 year fixed rates has narrowed to a point which is the smallest I can remember.
One other key feature to consider is that a re-mortgage “deal” or more accurately a formal re-mortgage offer can be available for up to 6 months - consequently a rate can be confirmed now, but not actually taken for up to 6 months (if at all, as there is no obligation to complete on the transaction until the legal formalities are finalised). This would allow time to see the initial outcome of the Brexit negotiations.
Whilst it should be noted that some fees are likely to apply, this may be an option to give peace of mind coupled with a wait and see policy of being able to walk away from the proposed new mortgage rate should it be beneficial to do so or taking up the offer if the opposite applies.
Who should consider a mortgage review at this time? Most definitely anyone paying their lenders standard variable rate, but in reality almost anyone who currently has a mortgage should consider a review including:
- Those who have a fixed rate which ends within the next 6 months
- Those who have a longer term historic rate – here we can build in the costs of exiting the current rate where necessary
- Anyone who thinks their recent credit history prevents a new rate being available – we may have a solution
- Anyone planning to move and paying a standard variable rate – most new deals can be transferred to a new home should you move
- People who have applied for a re-mortgage and been turned down – not all lenders are the same and we may be able to help
Our process is initially no obligation and will include, in most cases, a review of whether it is more beneficial to move from your current mortgage provider or take a new interest rate with the existing one.
In terms of managing your mortgage risk, what have you got to lose with an initial no obligation review at a time of such uncertainty?
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at paul@innovateml.co.uk or tony@innovateml.co.uk or call 0191 223 3514.
The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.
