If your mortgage rate is soon to expire here are some of the best remortgage deals on the market, expert hints on when to switch and tips for choosing your next deal
When it comes to remortgage deals, fixed rates have edged down in recent weeks as lenders priced in the much-anticipated cut to the Bank of England base rate which finally took place this month.
After seven months, the Bank of England cut the base rate from 5.25% to 5%. Most five-year fixed rates are still cheaper than two-year deals and opinions on whether the base rate will fall further this year differ. Mortgage rates are not expected to fall to the lows we have seen in the past but brokers hope to see more deals start with a four instead of a five.
Before you jump into your next mortgage deal, it is important to understand how the process works and take advice from a mortgage broker.
Thousands of homeowners will be bracing themselves for a mortgage rate shock if they’re due to remortgage this year. If you're coming off an affordable fixed-rate mortgage in 2024, your new mortgage is likely to cost more than your current one. The reason for this is that mortgage rates are much higher than deals seen in previous years.
For example, in July 2022, someone remortgaging with a 40% deposit could get an average two-year fixed rate of 3.64%, according to data firm Moneyfacts. Two years on and the equivalent deal costs 5.28%.
While some homeowners will be wondering whether they should fix their mortgage, and for how long, it's important they get advice tailored
Best remortgage deals in November 2024
Rates are correct at the time of writing and are for illustrative purposes. Speak to your lender or mortgage broker to find the best deal for your specific circumstances.
Early repayment charges apply. No valuation costs. £250 cash back. Only available through a mortgage broker.
Santander offers a five-year fixed rate alternative at 3.85%.
Early repayment charges apply. Free legal services. No valuation fee Minimum loan allowed is £40,000. The society also offers a five-year fixed rate at 4%.
Free valuation and free legal work. No early repayment charges apply. Only available through a mortgage broker. Minimum loan of £75,000 applies.
The rate tracks the Bank of England Base Rate by +0.15 percentage points which means your monthly payment can up or down during the two-year term of your deal. But with no early repayment charges, you can leave at any time.
Barclays offers a fee-free tracker at 5.50%.
Early repayment charges apply. This deal comes with a free valuation and £250 cash back. Only available through a mortgage broker.
Early repayment charges apply. No valuation costs. Minimum loan £50,000.
Virgin Money offers a five-year fixed rate alternative at 4.75% with a £995 fee.
You can also use our mortgage calculator for guidance on how much you could borrow:
When should you start looking for your remortgage deal?
You don’t need to wait until your fixed rate ends before you start hunting for a remortgage deal. You can start looking for a new remortgage deal up to six months ahead of your old one expiring.
You can reserve the rate in advance and proceed with the remortgage process but hold off your completion until the day after your deal expires. That way you’ll avoid moving on to your lender’s more expensive standard variable rate at all.
If there are lower rates available from your remortgage lender by the time you come to switch deals you can usually ditch the one you reserved and grab the cheaper one without losing any money.
Check what rates your existing lender is willing to offer you. They often reserve exclusive, cheaper rates for their own borrowers and some lenders will let you switch to a cheaper rate six months before your old one ends, penalty free.
How to find the right remortgage deal for your circumstances
To get the best mortgage deal, you need to compare rates and get your calculator ready to do some sums. You can search online for the best remortgage rates using a price comparison website, such as our sister brand Go.Compare. By submitting basic details such as your annual salary, how much your home is worth and how much you want to borrow, you’ll find the best remortgage deals.
‘When thinking about the type of deal to take, homeowners should consider how long they expect to live in the property,' says Chris Sykes, technical director, Private Finance. 'If you plan to move in a few years, it will be costly to exit a five- or 10-year fixed rate early. Borrowers should also consider if they need security over their monthly budget which will determine if a fixed or variable rate is most suitable.’
Mr Sykes says borrowers should also think about whether they’re likely to receive a cash boost soon; a bonus at work or an inheritance that they may want to use to pay off some of their mortgage. In this case, a variable rate that does not have penalties for making large overpayments could be suitable.
Many mortgage deals will apply charges if the mortgage is repaid within the deal period or if you exceed the limit of overpayments that can be made in a year. Most lenders restrict you to 10% overpayments a year.
And don’t assume your loyalty to your bank will be rewarded with the best rate.
Always shop around before taking an offer from your existing mortgage lender. Although your current bank can sometimes offer you a lower rate than other lenders, it may not be the cheapest deal on the market or the best decision for your circumstances.
Ask a broker to search the whole market for you to compare rates with your lender’s offer. They can reassess your circumstances at the same time to find if you need any extra finance, want to change your mortgage term or repay a lump sum before locking in to a new deal.
Brokers also caution borrowers against waiting to remortgage in case rates fall further. When you deal expires, you’ll be moved onto your lender’s default interest rate called the Standard Variable Rate (SVR) which is a lot more expensive.
Mr Sykes says: ‘A few months on your lender’s SVR could cost hundreds or thousands of pounds if you have underestimated the time it takes to complete a remortgage.’
How to work out how much you will have to repay
You’ll need a calculator to work out the best remortgage deal. Add together the monthly payments for the length of time you are tied in for (normally the duration of a fixed rate) then add the product fee, and minus any cashback.
For example, if you wanted to borrow £200,000 on a five-year fixed rate at 4.22% over 20 years with a £999 fee, it would cost you a total of £75,099 over five years (60 monthly payments of £1,235 plus £999).
You should do the same calculation for other deals you’re considering, then compare the total figures.
When looking at remortgage deals, you’ll need to understand your loan-to-value (LTV). This is how much of your property’s value you need to borrow as a mortgage. When you remortgage, the ‘deposit’ required is actually the equity in your property.
For example, if your house is valued at £200,000 and you need to borrow £150,000, this means you have a deposit/equity of £50,000 (25%) and you can apply for remortgage deals with a maximum LTV of 75%. The higher the proportion of equity you have in your home, the cheaper your rate will be.
Property values have risen significantly over the past two years. The more equity you have in your home the cheaper your rate will be. Make sure you get an up-to-date valuation to make sure you’re unlocking cheap rates that you may now be eligible for.
