When should I apply for a remortgage?
Over the last few days, a number of mortgage lenders have shown early signs of (finally!) reducing their interest rates. While this good news might make it tempting to wait and watch the market until the last minute before securing a new mortgage deal, doing so could be a risky move in today’s unpredictable market.
This is because the mortgage market is influenced by a multitude of factors, such as the rate of inflation, the global economy, and political events. And as the last few months have taught us, mortgage rates can rise as quickly as they can fall. So the rate you’ve been offered might not be around for very long at all.
With this in mind, it’s a good idea to secure a remortgage deal as early as you can, in order to lock in an interest rate and protect yourself from potential future rate hikes.
So when should I apply?
6 months before your current deal ends is the magic number, due to the fact that most mortgage offers are valid for 6 months.
Am I obliged to proceed with the deal once I apply for it?
No. Contrary to common misconceptions, starting the remortgaging process early doesn’t mean you’re locked into the new deal and obliged to proceed with it. The application can be cancelled at any time by the borrower if you decide you don’t want to go ahead.
Please note however that if you’re just taking a new product with your current lender (rather than remortgaging to a new lender), sometimes you ARE locked in – so check before you do that, or speak to us.
Whether you’re remortgaging or switching products with your current lender, the lender IS locked in, and will still honor the interest rate stated on your mortgage offer – as long as you complete within the 6 month offer validity period, of course.
So, this allows you to reserve a rate and then simply sit on it for those 6 months whilst you watch the market and wait for your current deal to end.
If a better option becomes available in the 6 months before your new deal starts, it’s possible for you to simply cancel the deal applied for and apply for the new rate instead. Whereas if interest rates increase within that time, you’ve got the peace of mind that you’ve managed to lock into the best possible deal while it was still available.
So taking action sooner rather than later is key to ensuring you get the best possible deal on your new mortgage.
How should I go about doing this?
It’s a good idea to speak to a mortgage broker. Firstly, because they’ll be able to search the entire mortgage market to ensure you get the best deal available at the point of application.
Secondly, a good mortgage broker will do the heavy lifting for you when it comes to monitoring interest rates between now and when your new deal starts. They have their finger to the pulse and can notify you if a better deal comes up – which is a service that your bank won’t offer you if you apply directly, and saves you hours of trawling the internet to try and monitor things yourself!
Helen Peel – 27th July 2023