Never been a better time to re-mortgage

With the Bank of England base rate at an all time low of 0.25% there has never been a better time to re-mortgage especially if you are paying a Standard Variable Rate (SVR).

Banking industry estimates calculate that approximately 39% of borrowers (some 4.4 million) are currently languishing on SVR’s.

Many lenders have adopted the insurance industry attitude to annual policy renewals – do you recognise the phrase from insurance renewal letters: “You do not need to take any action; we will continue to take (higher) premiums over the coming year”?

Such lenders similarly rely on borrower inertia to keep them wallowing on the SVR – the rate at which lenders often make their most profit.

SVRs vary between lenders and are an arbitrary rate set autonomously by each lender.  This is the rate you are automatically transferred onto at the end of your fixed rate term. Only approximately 50% of lenders have reduced their SVRs since the recent fall in the Bank of England rate. The SVR rate can be as high as 5% and the majority of lenders have set theirs at over 4%.

Fees free re-mortgage rates start at just over 1.50%, and as the lender pays the legal and valuation fees, the cost to the borrower is zero.

There are cheaper rates available, but beware of very low headline rates as these usually come with a hefty product fee which can be in excess of £2000. If your mortgage is under £200,000 it is often financially advantageous to the borrower to go for a slightly higher rate and no fees.

If you are coming to the end of a discounted or fixed rate deal with your lender, or indeed, if you are one of the current 39% on SVR, perhaps a review is in order.

For a free consultation of your re-mortgage options, with a view to reducing your current monthly mortgage repayments, please contact Reynolds Property Services.