Time to Remortgage?

800,000 borrowers are coming to the end of their fixed rate deal in the second half of 2023. This equates to around one-tenth of all borrowers.

(Source: UK Finance, June 2023)

Broadly, for those now looking to remortgage, there could be three main options to consider:

– Do nothing, and be placed on the lender’s Standard Variable Rate (SVR) at the end of the deal period. This is generally not the best option, as the SVR is normally much higher than the deals on offer.

– Identify another Fixed Rate deal for 2, 3, 5, or more years.

– Consider moving onto a Tracker Rate deal (with no tie-ins). This generally tracks the Bank of England Base Rate at a set percentage above it.

With a Fixed Rate deal you will know where you stand on monthly payments; currently over 80% of borrowers are on this.

Alternatively, Tracker deals might be something to consider if you feel that the Base Rate and Fixed Rate deals may be lower into the future, at which point you could move to a Fixed Rate down the line.

Sub 1-2% deals are a thing of the past

Whatever you opt for, the remarkably low interest rate deals of recent years are no longer on offer, in this more normal interest rate marketplace. This means that most fixed rate borrowers are likely to face a financial shock when looking at the current options, when their deal comes to an end.

To give you an example, the average 2-year fixed rate would be jumping from the 2.52% on offer two years ago to about 6.85%.

If £100,000 had been borrowed, over a 30-year period, then the extra payments might be around £250 more a month. (Source: moneyfactscompare.co.uk, August 2023)

Stay, or leave your lender?

That said, there are numerous factors which may come into the mix to possibly help lessen the increase in costs.

For instance, you might require the same loan amount, which may now be a smaller percentage figure against the increased value of your home. This could open up the better rates for you, particularly if the previous deal was a high loan-to-value one.

It could also pay dividends to consider the wider marketplace, as your existing lender may no longer be the most suitable choice. Or, it may conversely deliver reassurance for you that you’re best to stay where you are.

Additionally, by taking our professional advice, we’d fully assess the suitability of the options on offer – and not solely focus on the interest rate element.

Please get in touch to hear more.


Breakdown of Mortgage Borrowing

There are currently 8.5m residential mortgage borrowers, set out as follows:

Fixed Rate deals                = 81%

 Tracker Rate deals           = 8%

 Standard Variable Rate   = 9%

 Other                                  = 2%

(Source: UK Finance, 2022 figures, released March 2023)

 Please get in touch to hear more.

Your property may be repossessed if you do not keep up repayments on your mortgage.



Mortgage calculator

Monthly payments for a mortgage per £1,000 borrowed over 30 years

% Interest rate £ Interest-only* £ Repayment
0.25 0.21 2.88
0.50 0.42 2.99
1.00 0.83 3.22
1.50 1.25 3.45
2.00 1.67 3.70
2.50 2.08 3.95
3.00 2.50 4.22
3.50 2.92 4.49
4.00 3.33 4.77
4.50 3.75 5.07
5.00 4.17 5.37
5.50 4.58 5.68
6.00 5.00 6.00
6.50 5.42 6.32
7.00 5.83 6.65
7.50 6.25 6.99
8.00 6.67 7.34
8.50 7.08 7.69
9.00 7.50 8.05
9.50 7.92 8.41
10.00 8.33 8.78

Here’s how to use the mortgage payments calculator:  A £100,000 mortgage over 30 years, charged at a 5% interest rate would cost 100 x £5.37 (for Repayment) = £537 per month. * Excludes any payments to a separate savings scheme, to help pay off the capital amount borrowed.

This calculator only provides a guide to monthly payments and does not guarantee eligibility for a mortgage.  The actual amounts that you may have to pay may be more or less than the figures shown.  Please contact us for a personalised illustration.