If you’re still sitting on your lender’s standard variable rate (SVR) or will shortly be reverting to a SVR there is no time like the present to consider switching or re-mortgaging onto a fixed rate.
Make sure you fully understand the terms of the product, specifically the early redemption charges as there are still situations when the SVR may still be appropriate for example if you were currently thinking of moving in the near term. For those who see no change in their circumstances over the short to medium term then fixed rates are still incredibly low and well worth taking advantage of.
Up until earlier this year lenders were able to tap into cheap money due to schemes instigated when times were much tougher a few years ago, there are still inflationary concerns and whilst economic growth is slowing most commentators expect interest rates to start edging up..
The pricing of fixed rates has historically been dependent on money market rates available to banks – SWAP rates, and these rates have been slowly increasing for the past few months which has resulted in fixed rate pricing marginally increasing.
With Bank of England increasing bank rate at the end of 2017 and with future increases expected over the coming year considering fixing a rate could be a shrewd move. If you believe your circumstances will remain unchanged in the medium term then a 5-year fixed rate should also be a serious consideration – don’t let your judgement be clouded by some of the short term products below 2%.
The first point of call should be your existing lender, so we will ascertain what rates they currently have available coupled with the lender arrangement fees applicable. Then we’ll look to see what is available from other lenders and after fully understanding your current circumstances and plans we’ll be able to provide a detailed recommendation.
Many lenders will have various rates available with differing lender arrangement fees so we’ll need to consider given the level of borrowing you have to understand what is the most appropriate. Typically for larger loans taking the lower rate with a high lender arrangement fee can be more beneficial and those with smaller loans may find taking a slightly higher rate to minimise the lender arrangement fee will be more worthwhile.
The key at the moment is not to delay reviewing your mortgage and to make it one of your key commitments over the coming days and weeks. If you leave it you may well find that you have missed the boat when it comes to securing the best rates in the market.