Despite the interest rate increase in November’s budget, it could still be a good time to shop around for a new mortgage deal that offers a reduction on your monthly repayments and could potentially make significant savings over the lifetime of your mortgage.
Our partner CMME - mortgage specialists for the self-employed - offers some thoughts to consider if you’re contemplating switching from your current mortgage deal.
The ongoing uncertainty of Brexit may make the Bank of England cautious in raising interest rates further in 2018. So, whilst mortgage rates have generally increased in response to the recent base rate rise, you could still be likely to find a better deal than you have today, especially if you’re sat on a standard variable rate (SVR) which is vulnerable to rate increases at any time
Rise of base rate
To this end, the base rate rise has already triggered lenders to launch new deals, both to retain existing customers and attract new borrowers – a good example is Nationwide who bucked the general trend of mortgage rate increases by lowering their rates for both existing and new borrowers
Using a broker
If switching to a new lender, they will want to assess your affordability, income and bank statements as they don’t know you like your current lender does. If you have complex or irregular income, it may be worth using a specialist broker to ensure the lender takes a holistic view of your income and borrowing potential
Don’t overlook exit fees and early repayment charges, but depending on when you last fixed your deal, it may still be worth switching and paying the penalty to your current lender, as you could still make savings. This is especially true if you have already moved onto your standard variable rate, as it is highly likely you could obtain a lower rate with your current lender or a new lender
Fixed or Variable
Opting for a fixed or variable rate is down to personal choice and circumstances. A fixed rate guarantees security against rising interest rates but carries early repayment charges for exiting the deal early. Variable rates have no early repayment charges at any time and therefore offer flexibility to repay your mortgage or change lender with no penalty. It is important to take advice and shop around yourself, or use a specialist broker.