Should I wait for rates to fall before I re-mortgage?

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Ask the expert at Smith & Pinching about re-mortgaging options - Credit: Getty Images/iStockphoto

I am thinking of re-mortgaging as I’ve come to the end of my fixed rate period but am worried that I won’t get a good deal this time. Does the increase in the Bank of England Interest Rate mean mortgages are more expensive now? Should I wait for rates to come down again before I start a new deal?

Diane Fish, mortgage and equity release adviser with Smith & Pinching

Diane Fish, mortgage and equity release adviser with Smith & Pinching - Credit: Smith & Pinching

Diane Fish of Smith & Pinching responds:

The answer to this will depend on all of your requirements and circumstances but, broadly speaking, 2022 is expected to see mortgage rates remain relatively low, while some commentators are expecting rates to rise in 2023 and beyond. However, the last few years have seen mortgage rates at an all-time low for most people and some increase is generally expected.

A specialist mortgage adviser will look at your particular case and recommend a suitable solution. We would explore the terms of your current mortgage and the affordability of repayments, and look at any change in the value of your home. All these factors will have an impact on what mortgage deal you can get.

Mortgage rates can take several forms. Many people have historically gone for a low fixed-rate mortgage of two or five years, with a higher rate payable after that. If you have a variable rate mortgage, then the rate may rise and fall in line with the Bank of England Base Rate.

The other important area to explore would be any early repayment charges levied by your current provider if you re-mortgage now, and the cost of arranging a new mortgage. It may be beneficial to look at what your current lender is offering existing customers and at the same time compare this with the rest of the market. You will be able to arrange a new re-mortgage before your current deal has ended, so it follows on from the current mortgage, saving on early repayment charges.

Another challenge when comparing mortgage deals is to ensure that you are comparing like-for-like, with a number of factors other than the rate to consider including the term of the loan, borrowing fees, the flexibility on offer for overpayments, and the ability to “port” the mortgage to a new property if you choose to move house.

Your choice of mortgage will make a huge difference to your family budget. I strongly recommend that you make your decision with the help of an independent adviser.

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Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £700. Any opinions expressed in this article do not constitute advice.

For more information, please visit www.smith-pinching.co.uk