Mortgage rates are forecast to rise by £800 a year – should you remortgage early? | Personal Finance | Finance
Nearly 3,000 mortgage deals have been pulled by banks and building societies within the space of a week, according to Katie Brain, consumer banking expert at Defaqto. It’s led many people to consider remortgaging early to secure a better deal as experts predict interest rates could hit six percent next year. Express.co.uk asked mortgage adviser Daniel Knott to share his advice and knowledge with readers.
This week Money Saving Expert founder Martin Lewis advised people who are coming to the end of their deal to go onto a mortgage comparison site and speak to a mortgage broker.
While it makes sense for Britons who are on a standard variable rate or a fixed coming to an end in the next six months to look around for a better deal, the jury’s out when it comes to whether others with longer deals should remortgage early.
Mortgage broker Daniel Knott said lots of homeowners are asking him if they should remortgage early to secure the current interest rate.
He told Express.co.uk: “While it’s a near-certainty that interest rates are going to continue to rise, the acceleration and ceiling are what’s in question.”
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The best advice is to speak to an independent mortgage broker which is usually free of charge because they charge commission to the company.
Mr Knott added: “A mortgage expert can complete calculations for you, of which will then allow you to make an informed and balanced decision.
“The tipping point as to whether remortgaging early is the correct decision financially will be different for everybody.
“However, I must stress that there is no guarantee of how interest rates will look in 12, 24 or 36 months’ time.”
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It’s worth noting that homeowners could secure their next mortgage deal six months prior to their current deal ending.
Meanwhile, if people can afford to make mortgage overpayments, this is a great way to save thousands of pounds on interest charges.
However, Mr Knott warned people to be wary of Early Repayment Charges: “Before you overpay on your mortgage you must clarify if your mortgage product has any overpayment restrictions in place.
“Common maximum limits are 10 percent of the original balance or 10 percent of the outstanding balance.”
Earlier in the week Martin Lewis recommended people on fixed rate deals ending soon should do three things.
He said: “So the first thing anyone who’s got a mortgage that is variable right now, or a fixed coming to an end should do, is to quickly get yourself onto a comparison site to see what’s available.
“You should talk to your own lender to see if they’ve got any existing deals ’cause they can be easier to get and there are no fees.
“And you should definitely at this time, especially if you’re an inexperienced with mortgages, be using a good, independent mortgage broker.
“They are experts in mortgages so they can guide you through the pros and cons and crucially they know the affordability criteria that tend not to be available for consumers.”
