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With the Bank of England base rate having risen to 0.25%, and speculation that we may see interest rates rise further next year to control inflation. Should mortgagees who have an existing fixed rate be looking to review their mortgage and potentially looking to perhaps secure a longer-term fixed rate? This may be a question that many households will ask over the coming months.
Here is a scenario from an existing client who has over two years remaining on an existing 5-year fixed rate mortgage. However, in this situation the clients want to review their options with regards to securing a potentially longer-term fixed rate, whilst rates are still comparatively low.
Initially, our response to the client on initial investigation, was that they had early repayment charges of approximately £1400 and therefore they should consider this penalty. If the clients were wanting to save this amount over the remaining 2-year fixed rate period, then they would need to see a reduction in their monthly mortgage payment of approximately £58 per month, this would then make paying the early repayment charge worthwhile.
However, if rates do continue to rise, is there some sense in securing a lower rate that is still available and securing a longer fixed rate? Certainly, for mortgagees that are not looking to move and do not need further additional borrowing, then this could be very worthwhile investigating especially where the early repayment charge is not too costly.
Property valuation: £285,000
Existing mortgage: £74,000
Early repayment charges: £1400
Total remortgage required: £75,400
Mortgage term required: 25 years
Existing mortgage payment: £310 per month
Brief Summary of Potential Schemes available
Please note these figures are correct as at 21/12/2021. Rates are subject to change by lenders without notice
As can be seen from the figures above which include adding the early repayment charge to the loan, potentially the client could save up to £9 per month and further extend their fixed rate by 3 years. Or with the 10-year fixed rate pay an additional £13-20 per month and secure their fixed rate for a further 8 years. In this case as the client primary focus was to secure a fixed rate for a longer term. So, the clients are choosing to pay off the existing lenders early repayment charges and secure a longer-term fixed rate for their own peace of mind.
Every client situation and circumstance are different and therefore reviewing and getting professional advice is we believe extremely important. If you would like to review your options, then contact us using the Contact Us button below, please note we do not charge for initial consultations or providing research you can therefore research your options totally cost free.
If you decide to leave the remortgage until closer to your early repayment charge ending MMPE can set a review to assist at the appropriate time.
My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.
King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
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Changes in property value, coupled with a potential reduction in your loan amount (with a repayment mortgage), mean a change in the equity available in your property (Loan to Value); hence there could be improved opportunities for a better mortgage for you.
Sussed will track when your mortgage is due to expire (usually when your mortgage payments rise substantially as you will automatically transfer to your lender’s standard rate).
The app will alert you when it’s the right time to discuss your options with your mortgage broker.
Sussed can help you plan.
This feature is ideal for today’s economy and increasing prices. Sussed will continually scan the market, looking for the best-fixed rates available, especially when interest rates are rising.
Using a series of algorithms, our clever technology can identify longer-term fixed rates available today that could save money against predicted rates at the end of your current product term (including the cost of transfer) – sussed is doing all the hard work.
With automatic property value updates and your Mortgage information loaded, this feature calculates the amount of equity and the maximum potential loan that may be available within a landlord’s portfolio. This will assist with seeing if there is the opportunity for to perhaps buy another property from leveraging your portfolio.
Within sussed, you will also be able to see each of your properties with a roadside picture, a confirmed property value, monthly rental, current mortgage balance, payments, interest rate and the Loan to value/Gross rental yield.
Sussed can help you manage your portfolio.
This feature is there waiting for interest rates when they reduce. Using the same technology as Rate Riser, sussed will identify if your current deal is now able to be improved.
Should the interest rates decrease, sussed will compare deals available on the day with your existing deal and flag if there is an opportunity for you to save money by switching.
There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.