We all know 2020 has been a crazy year, but maybe you have been considering remortgaging? Or perhaps it was always your plan to remortgage in 2020 and now you are unsure if its possible. Let’s see if Mortgage Fit can shed some light on the situation.
Is now a good time to remortgage?
In all honesty, there is never a particular bad or good time to remortgage. It depends on your circumstance. For example, if you are on a standard variable interest rate, then yes it probably is a good time too remortgage. If you are 1 year into a 5 year fixed term with a 4% early repayment charge, then now is probably not the best time.
If you relate remortgaging to the current COVID-19 situation, while you may hear that interest rates are low, you might not see that reflected in the rates that you are being offered. That is because of risk. For lenders, it is a riskier time to loan out money and so to offset that, they increase interest rates, especially for higher loan to value products. But we cannot repeat this enough, it all depends on your situation.
What if I am on a Mortgage Holiday, can I remortgage?
It could impact what lenders will be willing to lend to you. There would be a question over your ability to pay back your loan if you are on that holiday because you are struggling to keep up with your repayments.
There are options though, for example if you are on a standard variable rate and on a mortgage holiday, then it could be possible to do a product transfer to a new interest rate product with your current lender at the end of your holiday.
Will being on a Mortgage Holiday now affect my chances of remortgaging in the future?
It won’t affect your credit score but lenders are deeper diving into their businesses, looking especially at self employed people i.e. why they have been affected, why have they taken a mortgage holiday in the first place, do they expect any issues in that industry moving forward?
So it doesn’t necessarily cause you a problem as there is always a solution for everything. However, there will be more questions asked, so expect to be grilled a lot more.
Can I remortgage if one or both people on the mortgage have lost their job or been furloughed?
The extension of the furlough scheme when you are talking about remortgaging, has become a problem. Lenders have been wary of furlough income since it came into existence and now, they won’t accept furlough payment at all, even if only 1 of 2 applicants are furloughed.
There are still options and your mortgage advisor will be able to help you through them, but people who are on furlough really need a return to work date with a confirmation letter of the return to work process. Some lenders will only want to have 3 months of post furlough pay slips to bring the formally furloughed applicant back into contention. Talk to you mortgage advisor so that you have all the options to make an informed decision.
What is the future for Interest Rates in 2021?
No one can know the answer to that, but we can speculate and give our opinion.
We don’t think rates are going to massively change, so we don’t think they are going to massively go up but, at the same time, don’t think they will massively go down either.
We are at a time now where interest rates are relatively volatile for the first time in probably 6-7 years and lender’s risk appetite is changing on an almost daily basis. You continue to see rates at higher loan to value creep up, because lenders still want to lend to people with a slightly smaller deposit but need to adjust for risk. People who have a lot of equity in their pocket will always benefit and I don’t think that COVID-19 had a massive impact on those interest rates and those loans.
At Mortgage Fit we are always free if anyone wants to talk more about their options for remortgage.
