FAQs: Everything to know about mortgages in 2022

FAQs: Everything to know about mortgages in 2022

It’s all change in the mortgage world right now.

As of October 18th, the base rate — the rate the Bank of England charges banks and other lenders when they borrow money — stands at 2.25%. This was a steep rise from September’s 1.75%. And a month prior to that, we saw it jump up

In addition to this, due to the recent instability in the financial markets fixed rate mortgages are at a 14 year high.

So, what does this mean if you are thinking of buying, coming to the end of your deal or struggling to afford your payments?

These are just some of the questions mortgage adviser Jo Jingree of Mortgage Confidence is being asked right now.  Jo has been in the Mortgage industry for over 20 years and we asked her to help make sense of it all.


1. Should I remortgage?

Remortgaging is a pretty common approach to take when your mortgage deal is coming to an end and you want to avoid going onto the lender’s standard variable rate (SVR).

“When it comes to mortgages, there isn’t a ‘one size fits all’ approach,” Jo says. “Every person is in a completely different situation.  Which is why, if your mortgage deal is ending within the next six months, now’s the time to talk to a mortgage adviser about your options.

“What was the best deal for you in 2020  – or even 2021 – might not necessarily be the case in 2022 and beyond. So, if you are worried about your repayments increasing due to rate rises, it is worth exploring your options with an adviser.”


2. What’s the difference between a rate switch and a remortgage?

Sometimes, remortgaging isn’t the answer. Instead, if your mortgage deal is coming to an end, you could rate switch. A rate switch means switching to a better rate with your existing lender.

Whereas a remortgage means switching your mortgage to a different lender, and usually with a new rate.

The benefits of rate switch include:

  • You don’t have to change your mortgage lender
  • It can be faster, as some lenders don’t financially reassess your situation and require you to go through the underwriting and credit check process

“And right now, more lenders are enabling you to lock in your rate switch up to 6 months before your deal comes to an end — which hasn’t been the case previously,” Jo adds.


3. I’m in rented accommodation, is now a good time to buy?

On one hand, with the rise in mortgage rates some landlords may decide to sell their properties in a bid to avoid higher mortgage payments. So, there could be more properties for you to choose from. Or they may look to pass on their increased costs which could lead to higher monthly rental costs. Another reason to consider buying.

But all that needs to be set alongside the fact that costs are rising for homeowners too.

Jo says: “With the current cost of living crisis, rise in rates, energy bills and food prices, lenders are reassessing their lending criteria. But it’s still well worth anyone who is thinking about buying to get in touch with a mortgage adviser to reassess their affordability and talk through their options.”


4. If I can’t afford my payments, could I increase my term to help with the repayments?

Again, this depends on a number of variables. But in many cases, yes.

Jo explains: “As long as the new term ends before retirement age, this could be possible. But it’s worth noting that while increasing your term should lower your monthly repayments, it could increase the amount of overall interest you have to repay.”

Again, this is why it’s important to reach out to an adviser to assess your options to help you make an informed decision.


5. Should I overpay my mortgage?

Overpaying your mortgage means paying more than the minimum monthly repayment amount agreed with your lender.

You could either do this with regular payments on top of your monthly mortgage or a hefty lump sum every now and then.

Overpaying your mortgage means:

  • You could reduce how much interest you pay overall
  • You could be mortgage-free sooner
  • The equity in your house could increase quicker

But if you want specific advice on your situation, speak to Jo as lenders do charge an early repayment charge if you go over the amount you are allowed to overpay.


6. Can I rent out a room to a lodger to help pay my mortgage?

If you have a mortgage, you must get the lender’s permission before renting out part of your home.

And if you’re a leaseholder or are living in a shared ownership property it’s always best to get the landlord’s agreement in writing first.

Also remember to check your buildings and contents insurance to make sure you are covered.

Jo adds: “While renting out a room to a lodger can give you an increased income month on month, when remortgaging, it’s important to know that lenders are unlikely to consider the income you receive from a lodger to count towards your affordability assessment.”

As you can see, there’s lots to digest.  And a huge number of moving parts in the mortgage world right now.  If you are a first-time buyer, buy-to-let mortgages, considering buying or would like to discuss your options when it comes to remortgaging, get in touch with Jo.


Jo offers a 30 minute no obligation phone call. So do reach out.

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