When Is The Right Time To Remortgage?

Take control of your Mortgage Repayment Rate

When Is The Right Time To Remortgage?

24 September 2019

Take control of your Mortgage Repayment Rate

Monthly mortgage repayment rates have been low for a long time now, thanks to the decision by the Bank of England to keep interest rates at their historic low. It can't go on forever by we can help you keep the best mortgage rates possible for as long as you can

When will rates go up?

There's no specific information as to when the Bank of England interest rates will increase but the Governor of the Bank of England, Mark Carney, has said that he won't review the current interest rates until unemployment drops to 7%[1]. This figure can be found on the home page of the Office for National Statistics [2]. It's currently 7.6%. It's not an absolute commitment but it should give some forewarning. This was the hot topic of discussion on a recent MoneyBox programme on Radio 4.

What will that do to my repayments?

Mortgages still in the fixed rate period won't be affected by a rise in interest rates until that period comes to an end. All other mortgages will see a rise in monthly payments when interest rates rise. Tracker mortgages follow the exact rise and fall of the Bank of England interest rates, so a rise of 0.25% will see the same amount added to the mortgage rate. Variable rate mortgages use a rate set by a bank that follows the Bank of England but that might change by a greater or lesser amount. Hopefully the rises would only be the same but there’s no guarantee, meaning they might rise faster than the Bank of England rate.

Where you live can still make a big difference, even though the rates are set at a national level. The mortgage deals open to you depend on your Loan to Value (LTV) ratio – how much of your property’s value you need to borrow. So if you live in an area such as Cowes or Gurnard the rise in house prices will get you a better deal.

Read our advice here on getting the best mortgage deal to keep repayments down.

References

1. Bank of England Forward Guidance document

2. The Office for National Statistics