Expert Tips for Navigating the Remortgaging Process
As more than 2.4 million mortgage deals are set to conclude in 2024, concerns have arisen regarding a potential financial timebomb due to a significant increase in homeowners' repayments. In response to this impending challenge, Felicity Holloway, the head of mortgages at Moneybox Home-buying, shares five valuable tips to help homeowners tackle the often daunting process of remortgaging.
Similar to obtaining a mortgage for a first home purchase, homeowners preparing for an upcoming remortgage should ensure their financial records present a favourable portrayal of their financial standing. This enhances the chances of securing the best possible interest rate from a lender. Organise and review all necessary documents, including identification, wage slips, and bank statements. Moreover, verify that credit reports are current and accurate.
Ask Comprehensive Questions:
In the midst of media reports concerning interest rates and rising mortgage costs, homeowners should not allow themselves to be overwhelmed. Seek expert advice from mortgage brokers, who can provide free and impartial guidance. Engage in open dialogue, ensuring that all queries are addressed before embarking on a mortgage application. Evaluate brokers to confirm they possess a "whole of the market" approach, as this ensures access to a wide range of options.
Don't Settle for the First Offer:
Homeowners should resist the urge to accept the initial mortgage offer they receive. While existing lenders often propose new rates before a fixed deal ends, it's crucial to explore other available deals. A mortgage broker can assist in comparing the offered "Product Transfer" rate with potentially better rates and packages from other sources.
Act Early and Monitor Rate Changes:
Given the market's volatility, waiting for rates to drop before remortgaging can be risky. Secure a new deal in principle approximately six months before the existing deal concludes. Keep a vigilant eye on interest rates, allowing room to switch to a better deal if one emerges before the current agreement ends.
Consider Affordability and Future Adjustments:
Lender incorporate a "stress test" during the application process to ensure mortgages remain manageable even if interest rates rise. While remortgaging might result in increased payments, lenders assess affordability to withstand potential changes. Mortgage brokers can provide insights on strategies such as opting for interest-only payments or extending the mortgage term, which can be adjusted later when financial pressure eases.
In conclusion, Felicity Holloway emphasises that informed and proactive decisions, guided by expert advice, can empower homeowners to navigate the remortgaging process with confidence. The looming challenge of expiring mortgage deals need not be a financial burden with the right approach and careful planning.