In a pretty daunting announcement for the UK mortgage market, data from the CACI Mortgage Market Database revealed that a staggering £111 billion worth of residential mortgages and £15.8 billion of Buy-to-Let mortgages are set to mature before the end of the year. This impending wave of mortgage maturities presents a perfect time for homeowners and property investors (landlords) alike to explore the potential benefits of remortgaging and product switching, with the help of a mortgage broker. With UK inflation recently dropping to 6.8% and mortgage lenders actively reducing their rates, the landscape is great for securing more competitive rates and beneficial mortgage products.
Remortgaging Your Property When Your Loan Matures
Remortgaging your property involves switching your current mortgage to a new deal, often with a different lender. Similarly, product switching or product transfer refers to switching to a different mortgage product within the same lender. Both options can be incredibly beneficial, providing homeowners and other property investors with the chance to reassess their financial situation with a qualified broker, capitalise on improved market conditions, and potentially save a substantial amount of money on your mortgage overall.
One of the most compelling reasons to consider remortgaging or product switching is the current state of UK inflation. Recently, it was announced that there has been a drop in inflation to 6.8%, signalling a potential economic stabilisation on the horizon. The Bank of England currently still has a target inflation rate of 2% which is of course still a long way from 6.8%. But having dropped from 11.1% in October 2022 and dropping from 10.4% in just 5-months, it isn’t something to be sniffed at. This drop in inflation could potentially translate into lower borrowing costs, making it a wise time for borrowers to potentially revisit their mortgage agreements.
Mortgage Lenders Reducing Rates
The last few months have certainly been a very turbulent time for mortgage rates and it seemed like every day lenders were increasing their rates to try and keep their heads above water. However, it now seems that mortgage lenders have taken note of the changing economic landscape as well. Many are responding to the reduced inflation rate by proactively reducing their interest rates. This is excellent news for those who are looking to remortgage or switch products, as lower rates can significantly decrease the overall cost of borrowing.
By taking advantage of these favourable conditions, homeowners and investors have the opportunity to secure more manageable monthly payments and potentially reduce the total interest paid over the life of the mortgage. For example, the average 75% LTV 5-year fixed mortgage rate currently stands at 5.92% with many lenders offering rates below 5.5%. Last month this figure was all the way up at 6.44%. Meaning that the same borrower could save 0.52% in the matter of a few weeks.
Speak To a Mortgage Broker About Remortgaging or Product Transfers
The upcoming maturity of over £126 billion worth of mortgages underscores the importance of being proactive in managing your financial obligations. Remortgaging or switching products before a mortgage matures can help borrowers avoid the risk of being moved onto the standard variable rate (SVR), which can often be higher than other available options. For example, Santander’s standard variable rate is currently 7.75%. By exploring competitive rates and tailored products with a qualified mortgage advisor, borrowers can maintain greater control over their finances and potentially save thousands of pounds.
It’s essential to approach the remortgaging and product switching process with careful consideration and proper planning. Here are a few key steps to keep in mind:
1. Review Your Current Mortgage: Take a close look at your existing mortgage terms, including the interest rate, repayment period, and any associated fees or penalties for switching. Make sure that it still works for you. if it doesn’t, then speak with your mortgage advisor about it.
2. Calculate the Savings: Evaluate the potential savings that can potentially be achieved through remortgaging or product switching. Consider both short-term and long-term benefits to determine the most suitable option for your financial goals. Your mortgage broker will again help you with this.
3. Consider Future Plans: Factor in your future plans, such as potential property investments or changes in your financial situation. Choose a mortgage deal that aligns with your long term objectives. What are you wanting to achieve with this property. Do you want to keep it? Are you going to sell in a couple of years? All of this makes a real difference when you look to refinance your property.
If you or anyone you know is coming to the end of either their fixed mortgage product or your entire mortgage is maturing, then please get in contact with our brokers at Oportfolio to discuss your options with potentially remortgaging or doing a product transfer. Our initial mortgage consultations are free of charge and can be done over the phone or face to face. Call or email our team today to get the ball rolling.