This is not the time to be hesitant or to watch what your neighbour is doing from afar. If your existing mortgage has expired or is coming to an end in the next couple of months you need to think about whether it’s time to remortgage your million pound property in London. Remortgaging is as “hot” a topic as property finance questions come in the news at the moment so you need to stay ahead and make an informed decision as to whether you should act before the interest rate rises. Here are four reasons to remortgage your million pound property in London today:
The last time interest rates rose was 8 years ago. Millions of homeowners have never experienced high interest rates but that’s all about to change. Mark Carney, Governor of the Bank of England, has officially announced the base rate won’t stay at its all-time-low of 0.5% for long and experts agree we can expect a rate rise between February and May next year.
You’re not the only person thinking it’s time to remortgage your million pound property in London. Indeed, in August, mortgage lending was at its highest level since the financial crisis struck in 2008 with many homeowners locking into cheap deals – 23% higher than a year ago.
There are a lot of mortgages on the market at the moment. That means lenders have more money available than there are people looking for mortgages. So although you may have missed the boat on some of the best fixes we’ve seen in a while, the market should open up again. Consequently, if you “sit, watch and take advantage” we predict criteria loosening, and rates perhaps even lowering so lenders can hit ambitious targets in the months to come.
For many people, your mortgage is your biggest expenditure and financial commitment. It follows, therefore, that streamlining the largest debt can produce the largest saving.
Some mortgage terms can run up to 35 or even 40 years. As the financial climate changes, so too do your mortgage requirements. A great deal can happen to your income prospects over the years so a “cleanse” and assessment of your finances from every angle is definitely advisable before a rise in interest rates. Either way, there’s no harm doing your sums and ensuring your choice to stay on your current mortgage rate is an active one.
Indeed, based on July’s average remortgage loan of £170,094 and a typical standard variable rate (SVR) of 4.84 percent, borrowers would pay £686 in interest per month if they had 20 years left on their loan. But switching to even just the average two-year fixed rate at 2.79 percent, they would cut their monthly interest to £396, saving £3,480 a year! You need only look at what these figures at the lower-end of the market demonstrate and place them in the context of million pound borrowing.
You will, of course, have to account for exit fees if you aren’t lucky to have a loan with no ERCs (early repayment charges) but often these fees are more than justifiable.
What a lot of people who are on the fence as to whether or not to remortgage don’t realise is house prices have increased in many parts of the country and the rises have, consequently, put homeowners in a much better position to secure cheaper rates. Islay Robinson, CEO of Enness Private Clients, supports this: “Our clients are actually often surprised just how cheap rates are, even compared to a couple of years ago”.
The above is a short and sweet overview of why you should swiftly remortgage your million pound property in London if you are on a rate which will be affected by the interest rate rises or if you haven’t revisited your finances in a while.
To learn more about remortgaging and the market climate why not download our High Net Worth Remortgage Guide today?