Remortgages, Product Transfers and the cost-of-living crisis

There’s no point dancing around the subject – we all know that the cost-of-living crisis has become a serious worry for millions of UK citizens. With energy prices sky rocketing, keeping on top of your outgoings can be incredibly stressful and with a further rise coming in October, perhaps it’s time to reassess your finances and see if your monthly repayments can be reduced.

Remortgages and product transfers can offer a solution to the cost-of-living problem by enabling you to arrange new terms on a mortgage to suit your financial situation. So, if you are starting to worry about managing your finances during this stressful period – keep reading to find out what method could suit your situation the most.

When it comes to using your mortgage to lessen any financial difficulties you may be having, you have two main options. One of these is to negotiate a new deal with your current lender (perhaps lengthening the repayment period while lessening the monthly payments). The other is to remortgage your property – going to a new lender to secure a better deal. The Financial Conduct Authority estimates that one third of homeowners pay their mortgage lender’s Standard Variable Rate – meaning that roughly two million households are potentially wasting money each month when they could be getting better rates.

Product transfers

A product transfer involves you and your mortgage adviser negotiating a better deal with your current lender. If you’re coming to the end of your fixed term, you’ll be switched to your lender’s Standard Variable Rate (SVR) – a rate that could be much higher than one you could get through a product transfer. It’s the best way to keep your monthly payments at a manageable level without having to switch lender. It’s also arguably the more convenient option of the two – with less paperwork being involved making the process much quicker.

Remortgages

Remortgaging is when homeowners change their mortgage deal or need to take out a larger loan to release more money from the equity of their home. Similarly, a remortgage can achieve much lower rates than your current lender’s SVR, however it can also free up your capital with additional borrowing which can be hugely beneficial if you’re looking to make improvements to your home (perhaps to improve its energy efficiency). If you’re looking to longer term solutions, improving the energy efficiency of your home can help to reduce the cost of energy for your home. If you’re not sure which of these two options best suits your current situation, or if you simply want to explore what’s available to you, get in touch with your mortgage adviser to discuss whether a product transfer or remortgage could help you cope during a worsening costof-living crisis.

If you’d like to discuss the options available to you, contact Bill Somers Mortgage & Insurances Services today.

Should you be in on the remortgage boom?

Recent analysis has shown that remortgages have risen by more than a quarter between the months of March and April. This is largely down to the multiple base rate rises announced by The Bank of England throughout 2022 and the response from lenders to raise rates accordingly.

Many consumers are now looking to ‘lock-in’ the current available rates in a long-term fixed mortgage ahead of any more potential rate increases – but is this the right thing to do? We look at how base rate rises and the cost-of-living crisis could persuade you to follow suit.

The number of remortgages have increased by more than a quarter between March and April. Over 50% of borrowers took out a five-year fixed rate product. With rates on the rise, it’s essential you take the time to review your current mortgage. If you’re currently on a variable rate plan or your fixed rate term is coming to an end in the next year or two, now could be the perfect time for you to lock in a new long term fixed rate mortgage before rates potentially get significantly higher in the coming months. As the economy tries to recover from the pandemic and combat inflation, rates are predicted to rise further – so acting quickly could save you money on your monthly repayments.

Remortgaging has other positives at this moment in time as well. Along with locking in your repayment rate, remortgaging now offers a unique opportunity for those worried about making money stretch amid the cost-of living crisis that the UK currently faces. Releasing equity in your property can be the perfect solution to being a little more comfortable as energy prices and inflation both continue to rise. So, if you find yourself struggling to cover the cost of your bills over the coming weeks and months, perhaps remortgaging is worth looking at – it could save you thousands.

There are some, of course, who won’t need to worry about a higher cost of living and are in a slightly more comfortable position financially. Well, remortgaging can still offer benefits to you too! As summer approaches, maybe you’re considering some home improvements? A conservatory? Maybe a home office? Whatever you may be considering, home improvements can be expensive – but not to worry. Remortgaging can make lump sums available to you to finance such projects so that you don’t have to save and could get the work done while the summer weather is (hopefully) warm and dry.

Remortgaging isn’t for everyone, but it does currently offer unique opportunities to take advantage of. If you just want to secure lower mortgage rates for the coming years, want some spare cash to help you through the cost-of-living crisis or maybe you want to add value to your property by doing some home improvements – whatever the reason, remortgaging could be the answer.

If you’d like to discuss the options available to you, contact us today.