Is this a good time to remortgage?
7th of May, 2020
Why Now Could Be a Good Time to Remortgage
Have you been thinking of remortgaging but aren’t sure what to do considering the situations we’re all facing at the moment? You may be assuming that remortgaging in the middle of a global pandemic may not be possible, but this is simply not the case.
While you may be asking if remortgaging is a bit risky right now, considering the financial situation we’re in, you might be interested to know that the pandemic need not put you off getting a better deal for yourself, and there are plenty to be had.
Despite many people facing uncertain times, lenders are still lending, although the number of mortgage products has reduced in recent weeks as a result of the Coronavirus crisis. And although lenders have been under some pressure as a result of increased requests for mortgage payment holidays, they are quickly beginning to change working practices and processes to deal with these.
Take Advantage of Competitive Interest Rates
In an effort to help the market in these trying times, the Bank of England has made two interest rate cuts through March which means mortgage rates are extremely competitive at the moment. There isn’t necessarily any advantage right now to stick with a lender’s variable rate, so it makes sense to consider reviewing your mortgage and seeing what options you could take advantage of.
All Depends on the Valuation
The main problem for remortgagers at the moment is down to lenders being unable to perform ‘face to face’ valuations on properties as they normally would in order to ascertain how much money they’d be prepared to lend on the property. However, there is a plan in place to circumvent this. Lenders are currently using automated valuations and limiting these to properties which are of a standard construction; such as brick and timber for example.
The majority of the UK lenders are now using automated valuations, some lenders are allowing applications of up to 90% loan-to-value (LTV). It is important to know that if you are looking to remortgage with a higher LTV then there will be less choice but there could still be some options for you to save money. While automated valuations have been used for a number of years, they can vary slightly from lender to lender.
There is still a good amount of choice available for the anxious remortgager with the most competitive rates at 60% LTV and below. However, you can actually remortgage up to 90% Loan to Value now and the rates available are, with some lenders, very competitive. It is important to note that the cheapest rate isn’t always the best option, however, and this is why getting good advice and being made aware of all your options is important.
Furloughed? No Problem!
The government acted fast to set up the job retention scheme and allow employers to furlough workers to ensure payment of up to 80% of an employee’s salary. While this is good news and provides some financial stability, what does it mean for those needing to remortgage? Most lenders have confirmed their position towards furloughed employees. Many will continue to accept applications for remortgages but will use the 80% of the employees’ usual income when calculating affordability, upto the furlough limit of £2,500 per month. However, if your employer is topping up your income so you’re not currently losing out on your salary, you’ll benefit from having the full 100% of your income used for affordability as long as you can provide evidence your income is being topped up.
Time to Use a Mortgage Broker
If you are looking to remortgage, it makes sense to use a mortgage broker who has expert knowledge, insight and access to up to date changes within the industry especially if you are currently on furlough. For those looking to review their mortgage options, using a mortgage broker will ensure all your options are discussed. . Why not get in touch to see what deals we could find for your remortgage? Whether you’re furloughed, or still working through the pandemic, we’ll work to find the best deal we can for you and provide the best advice for your circumstances. If we feel you shouldn’t remortgage or there are better options for your current circumstance we will be honest about this as providing the best advice for you is our priority.
Feel free to contact me with any questions via messenger, 07947 279 519 or email me at [email protected].