The media is full of the possible implications on our economy of the war in Iran. At the time of writing, average mortgage rates in the UK have surpassed 5% and nearly 500 mortgage deals have been pulled in the past 48 hours. This according to the Guardian
Mortgage Adviser, Jo Jingree, said: “The people I speak to every day are hugely concerned about how world events are going to impact their mortgages and their monthly bills. So, I want to use this month’s blog to explore what you can do to minimise any financial impact. Based on what we know right now!”
This situation is mainly relevant to people with a fixed rate mortgage deal that finishes in the next six months or so. And Jo’s advice is simple: “In these circumstances, activity beats inactivity. And I honestly believe that this is where a professional adviser comes into their own. The situation is incredibly fluid, but we have links into a wide range of lenders and are well placed to get the most up to date information as the situations continues to unfold. My advice is take advantage of this knowledge base and book a call with a professional adviser. I’m certainly encouraging all my clients with a fixed rate expiring to get in touch.”
What are the options?
Once a mortgage deal finishes there are two main options:
- Product transfer/switch. When you take a new deal with your existing lender
- When you take a mortgage deal with a new lender
Pros and cons
Of course, there are things to consider with both options.
Product transfer/switch. Taking a new product with your existing lender can be a more straightforward and speedy option. It won’t be necessary to repeat the full underwriting process. This is the lender’s comprehensive review of all your financial information including your income, assets and debts.
It’s possible to secure a new rate with your existing lender up to three months before your current rate expires.
With a product transfer or switch you often can’t change any other element of your mortgage. So, if you want to alter the term or amount of the mortgage then this probably isn’t the option for you.
A Remortgage is a more involved process as it requires a new application to a new lender. Which means that you will need to undergo the underwriting process. In addition to the full review of your finances, the new lender will need to verify documents and conduct a property appraisal. This enables them to assess whether you qualify for the loan.
Lenders often offer incentives to encourage you to swap. These might include a free valuation or legal fees.
With a remortgage, you can secure a new rate up to six months before your existing one expires.
So how can an adviser help?
As a professional adviser, Jo will meet with you to review your situation, sense check mortgage affordability and discuss your attitude to risk. This information will inform the advice she provides in terms of which deal will be most suitable – both in terms of cost and the length of the fix.
Once you decide on the most suitable course of action, Jo can lock in a new rate well in advance of your existing on expiring. This can provide certainty and peace of mind. But, as Jo explains, it doesn’t end there: “My job continues after a new rate has been locked in. I will continue to review the situation once it’s secured so that if the market moves and more favourable options become available we can look at pivoting. This continues up to around two weeks before your existing rate expires. So locking in a new rate early is a no brainer”
If you’re coming to the end of a mortgage deal, do get in touch.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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