Remortgage: Why it’s Not Better Time, Even if you have to pay exit fees

Remortgage
The mortgage market is so competitive that hardly a day goes by without another lender launching a sub-1 per cent Remortgage deal as banks compete for business.

It is not only residential fixed-rate mortgages which have fallen in price – buy-to-let rates have also fallen below 1 per cent and trackers are getting in on the act. Yorkshire Building Society has just launched a 0.78 per cent two-year tracker with £995 fee for those with a 35 per cent deposit – the lender’s lowest ever rate.

As inflationary pressures have made a rise in interest rates next year more likely, according to Bank of England governor Andrew Bailey, it has never been a better time to remortgage. It may even be worth doing so if your current deal has early repayment charges (ERCs) for getting out of the mortgage early.

For example, if you have a £1m property with a £600,000 mortgage with 15 years left to go, fixed at 2.5 per cent with a 1 per cent exit fee to get out early, you could move to HSBC’s 1.1 per cent five-year fix and save £23,040 over the five years. Even though your exit fee is £6,000, you would save much more than this by switching, making it well worth doing.

While mortgage rates have fallen across the loan-to-value (LTV) bands, the best deals are still available to those with the most equity in their homes. With property prices reaching a record high last month, according to Halifax, homeowners may find that their LTV has fallen since they last remortgaged, enabling them to access a cheaper rate.

The key is to work out the total cost of any remortgage, including fees and ERCs when comparing the cost of switching to a new deal. A whole-of-market broker such as AWS Private Finance will be able to do the sums for you. Get in touch for more information.
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