Despite the fact that interest rates are at an all-time low, more people than ever have to remortgage their properties and homes because banks and lenders have raised their SVRs, or standard variable rates, from 4.24% to 4.74%. In the future, other lenders might raise their standard variable rates, mainly because the rates private lenders charge are not associated with the Bank of England’s mortgage base rate.
Check your credit Before you jump into remortgaging, make sure you check your credit rating. Obviously, banks are less willing to remortgage those with poor credit ratings. In the past, things like a missed credit card payment did not matter much when it came to reworking a mortgage, but in this recessed financial climate, a questionable rating can damage your ability to remortgage.
Learn about the options When you meet with your lender you will be presented with different types of mortgage deals. Acquainting yourself with these options in advance will make the remortgaging process a much easier one. For those with budgetary constraints, a fixed rate deal is probably your best option. Taking on a fixed rate remortgage plan means you have the knowledge, and perhaps the benefit, of paying the same mortgage fee every month. If you are looking for a lower rate, at least in the short term, a variable rate plan is the one to go with. Although interest rates are not projected to rise in the near future, you need to be sure that you have the income or savings to pay off any sort of interest increase if you remortgage with a variable plan. There are two types of variable rates available: tracker and discount. A tracker mortgage is directly related to the base rate SVR, which is determined by the Bank of England. Your rate will only change when the Bank changes its base rate, so it is a very secure plan. Alternatively, discount rates correspond to your lender’s standard variable rate, and are therefore subject to change whenever.
Be realistic and communicative Most people are deeply connected to their houses in a personal, meaningful way. The home’s personal value, however, does not translate into any monetary market value. To secure a favourable rate, though, you will need to put a fair amount of your dwelling’s equity into the deal in order to qualify, so having an objective understanding of your dwelling’s value is crucial. Finally, if you are unsure what mortgage plan is best for you, be open and honest with your lender. They will help you come up with an SVR and plan that will allow you to pay your mortgage comfortably and consistently.