One of the questions we’re asked frequently by our clients is when the Right Time to remortgage is?
There are lots of factors that influence mortgage rates, including the cost of borrowing for the lender, the levels of competition in the mortgage market and the lender’s view of the risk associated with lending to you.
However, the factor that has the biggest impact is undoubtedly the Bank of England base rate with currently sits at a historically low 0.1%.
With this in mind, plus the fact that many of us have a lot more spare time on our hands than usual during the lockdown, now may be the ideal time to consider Remortgaging.
How Are Lenders Handling Covid-19
The majority of the mortgage process is now handled online or over the phone. Very little face to face interaction is required to set up a mortgage except for property valuations.
Typically, lenders will require a physical valuation be carried out on the property they are lending against to ensure it is worth what they’ve been told.
During the Covid-19 pandemic, this is obviously not feasible, and so the majority of lenders are moving to automated valuations.
Automated valuations are not new. Lenders have used them for a number of years alongside a physical valuation.
Each lender will have their own set of rules regarding when they will use automated valuations. Most will have restrictions on the maximum loan-to-value (LTV), while some may not accept automated valuations on properties of a none standard construction, flats or bungalows.
By using a mortgage broker, those who wish to remortgage can find a lender who will be more willing to accept their application.
What Mortgage Deals Are Available?
The Covid-19 pandemic has seen the number of available mortgages shrink in recent weeks. As we’ve covered above, lenders are unable to perform physical valuations plus, large numbers of their existing customers are requesting payment holidays. For these reasons and the general uncertainty about the future, many lenders are less willing to take risks.
However, the market is now starting to adapt, and we are starting to see mortgage deals that reflect the exceptionally low base rate of 0.1%.
For those remortgaging at 60% LTV and below, there are some excellent mortgage offers available for 2 and 5 year fixed term periods. Those people at 80% LTV should still be pleasantly surprised by the range of options and the competitive rates available.
If you are no longer on a fixed term rate with your current mortgage provider and can move lenders without any penalties being imposed, then it is certainly worth looking at your mortgage options.
Review Your Insurance Needs
If the Covid-19 pandemic has taught us anything, it’s to expect the unexpected. None of us anticipated how our lives would be altered in 2020, and the impacts a previously unheard of virus would have on our finances.
Protection against pandemics is something that the insurance industry and the UK Government are working on for the future. However, there is a wide range of insurance products on the market that can help protect you and your family from other unexpected events.
Some insurance types to consider;
Life Insurance: This type of policy pays out a lump sum upon the death of the policyholder. The money can help them pay for household bills and mortgage repayments and provides financial security during a challenging, emotional time.
Income Protection: If the policyholder becomes ill or is injured and is unable to work, income protection pays out a regular sum to replace part of the lost income.
Critical Illness Cover: If the policyholder develops one of the specified illnesses covered by the insurance, then a lump sum is paid out.
Mortgage Payment Protection Insurance: Covers the mortgage repayments if the policyholder suffers illness, injury or unemployment.
The Right Time to Remortgage – Summary
While none of us wants to be in lockdown, using the time to review your finances and insurance policies will at least mean that you come out the other side better financially prepared for the future. By engaging with a Mortgage Broker, you can not only save money on your monthly mortgage repayments, but they will also carry out a complete financial health check as part of the process.