If you switch mortgages for one with a lower rate, you could save around £200 a month, says a September 2016 Daily Mirror article.
According to Esther Shaw, former Personal Finance Editor of the Independent on Sunday, now is a good time to remortgage.
Many lenders have reduced their interest rates. People on a standard variable rate (SVR) mortgage have seen their mortgage payments cut, but more savings can be made by switching mortgages. By switching from an SVR rate of 4.71% to a two-year fixed mortgage at 2.46%, borrowers could save more than £200 a month.
When house prices rise, the mortgage represents a smaller proportion of the value of the house. The smaller this proportion is, then the lower the interest rate for remortgaging. Shaw gave examples of how this works. In the case where the mortgage is worth 90% of the home’s value, a 3.79% mortgage deal will be available with some lenders. At 90%, rates can be as low as 2.99%, whereas at 75%, interest decreases to 2.84%. At 60%, this drops to a much less enticing 2.44%.
Shaw recommends using a mortgage broker to find the best remortgage deals. She said that brokers can make the whole process easier. There are often fees involved in switching mortgages and these need to be taken into account. A broker can help you calculate how much you can save when remortgaging.
A broker can also arrange a mortgage protection policy that provides the peace of mind in knowing that the mortgage payments are covered if you temporarily lose your income through sickness or an accident.