Why working with a mortgage adviser and broker is so important when remortgaging

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Remortgaging can be a fantastic way to obtain a better deal on your existing mortgage, or even to procure a more flexible deal that works for you.

Though, mortgage markets have been uncertain lately; thousands of lenders pulled their mortgage deals following the announcement of Kwasi Kwarteng’s mini-Budget in September, and Bank of England (BoE) base rate hikes have resulted in higher mortgage repayments for many households across the country.

Despite precarious markets, you shouldn’t let this deter you from remortgaging. By working with a mortgage adviser and broker, such as us at Verve, you can alleviate some of the stress from the process and find the right mortgage for you.

So, continue reading to discover how our in-depth service works with you many months before your current mortgage deal expires, giving you the peace of mind you need when it comes to your home loan. 

Mortgage rates have been on the rise due to base rate hikes and market uncertainty

You may have seen headlines recently detailing the BoE’s base rate hikes. Indeed, the Bank’s website states that the base interest rate rose from 3% to 3.5% following the December meeting of the bank’s Monetary Policy Committee (MPC).

This is the ninth consecutive rate hike since December 2021, which has resulted in the highest base rate in 14 years.

According to the BBC, the base rate could potentially rise again at some point through the new year; some analysts even predict that it could rise as high as 4.75%. 

This is because the BoE has an inflation target of 2%. So, with the Consumer Price Index (CPI) resting at 10.7% in the 12 months to November 2022 according to the Office for National Statistics, the MPC is under pressure to increase rates even further to try and bring inflation under control. 

When the base rate is increased, borrowing subsequently becomes more expensive. This, in theory, deters you from spending and encourages you to save instead. 

Then, with less demand for the purchasing of goods and services, prices should start to drop, and inflation should follow suit. 

A higher base rate could result in you having to pay more for your mortgage

Unfortunately, when the base rate increases, your mortgage could become more expensive. 

If you’re on a fixed-rate mortgage, you should be protected from any price hikes for now since your repayments are fixed. 

However, if you’re on a variable- or tracker-rate mortgage, your payments will likely rise. This is because these mortgage products typically move in line with the BoE base rate. 

This is an issue that affects many households in Britain. Indeed, the Times Money Mentor states that there are around 850,000 people in the UK on a tracker-rate mortgage, while 1.1 million are on their lender’s standard variable rate (SVR).

Furthermore, the above source shows that 1 in 4 mortgage customers have seen their mortgage payments rise approximately every six weeks since December 2021. 

To reinforce this fact, Moneyfacts reports that the average two-year tracker-rate mortgage stood at 3.69% on the day of the base rate hike. Following the decision to increase the rate, the average rate for tracker-rate mortgages jumped to 3.85% just the very next day. 

As the Times Money Mentor reported, this means that, compared to deals before December 2021, the average tracker-rate mortgage customer is paying around £284 more every month. Meanwhile, variable-rate mortgage customers are paying an extra £179 each month. 

Working with Verve Financial could help you source a brilliant new deal well ahead of time

With rates on the rise, there has been no better time to work with a mortgage adviser and broker. This is especially the case if you’re looking to remortgage when your current deal ends. 

The benefits of remortgaging are plentiful. When your current mortgage deal ends, you’ll likely be placed on your lender’s SVR. This can be an uncompetitive rate, so you should aim to avoid being left on your lender’s SVR for an extended period.

There is also a risk of the base rate rising again at some point in the coming year, which could result in mortgage rates increasing even further. And, since lenders can change their SVRs as and when they like, your mortgage could become more expensive regardless of the base rate. 

Additionally, if your circumstances have changed, such as receiving a pay rise or inheriting a sizeable sum of money, you may want to pay off part or all of your mortgage. Remember that some mortgage deals may restrict the amount you can pay each month with early repayment charges (ERCs).

So, by remortgaging, you could source a more flexible mortgage that gives you more control over elements like this, moving to a deal that better suits your current circumstances. 

As you can see, remortgaging offers an intuitive way to manage your existing mortgage, though it’s vital you don’t leave remortgaging until the very last minute as this can cause unnecessary stress and pressure. 

This is why Verve Financial will review your mortgage deal six or seven months before it expires to give you a clear understanding of the rates you could receive in the future.

We will closely review mortgage rates on a monthly basis so you can rest assured that you’ll get the most suitable deal on a remortgage when your current deal ends. Then, we’ll continue to advise you throughout the entire six- or seven-month period to ensure that the mortgage you’re moving to is still the best option available for you. 

When mortgage markets are so uncertain, having an adviser and broker in your corner can give you the well-deserved peace of mind that, when you eventually do remortgage, the process will be as smooth and painless as possible.

Get in touch

If you’d like to speak to an expert mortgage adviser and broker to help you find the right deal, please get in touch with us at Verve Financial.

Email us at office@verve-financial.com or call 0330 320 5048 to speak to us today.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Think carefully before securing other debts against your home.

Posted 07/12/2022

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