The turbulence of the last 18 months has really encouraged us to consider our finances. How much financial stress can we tolerate before action must be taken? There is only so much you can cut from your budget before you must increase the money you have coming in. Having said that, should you remortgage and save more in the long term?
How to Decide if You Should Remortgage Right Now
With the 2020 pandemic ongoing and current supply chain issues in mind, interest rates with the Bank of England are at an historic low. You will need to put your hands on your current mortgage information. Then use this Remortgage Calculator to give you relevant and personal figures to your situation. Unlike many online calculators this one won’t ask for any personal information to use. Having an awareness of your families incomings and outgoings will always serve you. Even if this means you become aware of any shortfalls, it gives you the power to make the changes necessary to being solvent.
The Pros and Cons of a Remortgage
Coming to the end of your current rate is the perfect time to review your mortgage finances. Hopefully you have increased your equity and therefore can command a lower interest rate based on your Loan To Value (LTV) ratio. The current climate means that the fixed rates we are seeing means you have even more opportunity to get more equity for your money! Use this Mortgage Calculator to understand if it is worth it for you.
My biggest hesitation in whether you should remortgage right now is if your fixed rate isn’t coming to an end. If it isn’t you will likely have to pay an Early Repayment Charge. This added to the potential cost of a new mortgage can often eat up any savings you could have made.
Having said that, if you are currently on a flexible rate you are likely saving a lot of money. There would be potential to save in this circumstance as eventually the rates will rise. By keeping an eye on the rates you might be able to secure a decent fixed rate to mitigate any sharp increases that may come.
What’s the Latest with Mortgage Interest Rates?
Unfortunately no one can predict the future. I believe that the Interest Rates will rise because that’s what they do. Ultimately only you can decide if you should remortgage at this time. It is worth using the calculators to understand how much of an overpayment could bring you into the lower LTV ratio and therefore provide a buffer for when you come to remortgage. If you manage to increase your equity by 5% each time you fix you will always be a step ahead of any rate increases because you have built in a cushion within your existing budget.