Step 5. What is the best time to remortgage?
This last question is about when you should actually proceed to remortgaging. We will of course be pleased to help: you are always welcome to make a free telephone appointment with one of our mortgage advisers to discuss your situation and set the best time frame. Here are some rules of thumb:
My fixed-rate period will expire within 12 months
If this is the case, this is the right time to explore your options. You can make all the remortgage arrangements at this time, so that in 12 months’ time you will have a new mortgage. The longest mortgage offers are valid for 12 months. Of course, you can wait a little longer if you expect the interest rate to fall in the next few months. The lower the interest rate, the more money you will save with remortgaging your house!
My fixed-rate period will expire within 7 years
First of all, you have to consider what you expect interest rates to do. Nobody can accurately predict what the mortgage interest rate will do over the next few years, so you can only know what is best with hindsight. Do you expect the interest rate to fall? Then it is better to wait. Do you expect the interest rate to rise? Then it can be worth remortgaging at the current low interest rate.
The benefit of a remortgage is that you will have lower monthly repayments. It can also give you more security in the long term. If your interest is currently still fixed for several more years, you can fix the interest rate in your remortgage for another 10 or 20 years (at the current low rate). The downside of a remortgage is the costs involved.
I have a savings-based mortgage or annuity mortgage
If the mortgage is repaid from the balance of a bank savings account or an annuity repayment, remortgaging is often not financially very interesting. This is because the benefit of a lower mortgage interest rate in these types of mortgages is (partially) counteracted by the fact that the deposit for the savings account or the repayment charges will rise. On balance, a lower interest rate will almost always save you money, but the benefit is strongly reduced in these types of mortgages. It is doubtful that this limited benefit is sufficient to recoup the costs. In fact, often this is not the case.
Tip 1: Take action immediately if you have a partially interest-only mortgage with a fixed-rate period expiring within 12 months.
Tip 2: Sit back and wait if you have a savings-based or annuity mortgage for which the interest has been fixed long term.