In the current economic climate, most people who have got mortgages are obviously worried about the effect rising interest rates will have on their mortgage payments both now and in the future. Therefore it is more important than ever to review your mortgage and make sure you are aware of your options so that you can either do something about it now or plan for the future.
If you are on a fixed rate (or other type of deal where you are tied-in such as a discounted variable rate/tracker), when your deal ends you will have 3 main choices: –
- Do nothing and let it revert to your lender’s Standard Variable Rate (SVR)
- See what alternative products your current lender can offer
- Transfer your mortgage to another lender by remortgaging
Mortgage Review
If you would like a free review of your mortgage, Active Mortgage & Insurance Solutions can advise you about your options and provide help and advice so that you can make the right decision.
Whether the right thing to do is to change lenders (either now or in the near future) or stay with your current lender and arrange a product switch, Active Mortgage & Insurance Solutions can arrange this for you.
Essential important facts that you should be aware of
- Product switches/transfer with your current lender
You can potentially switch mortgage products once you are inside a window of 3 – 6 months from the end of your current deal. (the length of the window in your case will depend on which lender you are with). In these circumstances, early repayment charges will be waived by your current lender if you take out another product with them even if you arrange it in advance (provided you are within the window as mentioned above). The ease with which you can do this depends on your lender, but the ideal time for the new product to start is usually on the day after your current product ends (assuming your current rate is lower than what the new one will be). - Remortgages
If you apply for a remortgage, once your application has been made, that will initially secure your mortgage product – and provided the lender is happy with your application once it has been fully underwritten, they will then issue a mortgage offer. Although it depends on the lender, mortgage offers are often valid for 6 months – so once the offer is issued, you can hold off completing until your current deal finishes. The main benefit of doing this so far in advance of your current deal ending is that you are able to secure a mortgage product based on today’s rates rather than what they will be when your fixed rate ends. - In addition to obtaining a mortgage product with a more competitive interest rate, remortgaging can be used for lots of other reasons as well, such as capital-raising money for home improvements and debt consolidation. It can also be used to add or remove somebody from the mortgage, increase or decrease the term or change from interest-only to repayment.
Common questions
- When is the best time to review my mortgage?
The sooner the better. You can review you mortgage at any time and by doing so you can make sure you are aware of your options both now and in the future. However, if you are looking to do this when your current fixed rate or tracker deal ends, it is best to start the process at least seven months before it finishes. This will then ensure that you have plenty to time to weigh-up your options and decide on a plan - Does it cost anything to have a mortgage review with Active Mortgage & Insurance Solutions?
No, all advice is free - Will I need to pay an early repayment charge on my current mortgage?
As a general rule, you usually have to pay an early repayment charge if you redeem your mortgage before your current product ends. However it is important to be aware of the following: –- An early repayment charge won’t usually apply on a product transfer with your current lender (provided you are within the 3 – 6 months window)
- If you remortgage and transfer your mortgage to another lender, an early repayment charge won’t apply to your existing mortgage provided that you delay the completion of your new mortgage until after your current fixed or tracker rate ends (the new mortgage should ideally be arranged to complete on the day after your current deal ends)
- Will an early repayment charge definitely apply to my current mortgage?
No, not necessarily. If your mortgage is on the lender’s standard variable rate, it is very unlikely that there will be an early repayment charge. Even if you are on a fixed rate or a discounted tracker rate, you might have chosen a special product that has no early repayment charges (these types of product are not very common). However, on the vast majority of fixed rate, discounted or tracker deals, an early repayment charge would apply during the period of the fixed or discounted rate. - Can I choose to redeem my mortgage now and pay the early repayment charge?
Yes you can choose to redeem your mortgage at any time and pay the early repayment charge that may apply, but this isn’t usually a good idea because the amount of early repayment charges can be quite significant (although not always). However, everyone’s situation is different and it can occasionally be a good thing to do in some circumstances. - Where can I find details of when my current product finishes and information about any early repayment charges that may apply?These details will be in the mortgage offer or mortgage illustration provided by your lender when you first arranged your mortgage (if you have done a product transfer with your current lender since arranging your original mortgage, the details will be included in the illustration provided for that).
Your home may be repossessed if you do not keep up repayments on your mortgage.
