Whether it’s travel, career or home planning, there can be lots of excitement that comes with starting a new year. But as with any time of year, there can also be some stresses, remortgaging being one of them.
If you’re one of the 1.6 million households whose fixed-deal mortgage term is coming to an end in 2024, you may be wondering what the market will look like and if there’s anything you can do to maximise your chances of getting the best deal possible.
Read on for our guide on how to prepare if you’re planning to remortgage in 2024.
The fixed-deal landscape today
It’s been reported that swap rates, which are used to price fixed-deal mortgages, have been decreasing and that, as the housing market has slowed, lenders are more incentivised to reduce their rates.
If you’re due to remortgage in 2024, this may bring some reassurance that rates are moving away (in the right direction) from the 6.5% peak which they reached in the summer of this year. The average interest rate for a 90% Loan-To-Value two-year fixed-deal as of 12 December 2023 is now 5.76%.
Will mortgage rates continue to fall in 2024?
This is tricky to predict and no one can ever be certain which way mortgage interest rates will go. We recently reported that selected mortgage rates had decreased following the September Bank of England (BoE) interest rate announcement, which saw the Bank Rate held at 5.25%.
November’s BoE Monetary Policy Summary revealed that the interest rate will be held at 5.25% for a second time. This, along with the fact that inflation was 4.7% in October, down from 6.3% in September, could be good news for borrowers; a steady bank rate and lower inflation may mean lower interest rates in the months to follow.
Preparing for a new deal
There are a few things you can do ahead of your fixed-deal coming to an end to get you in a good position for remortgaging.
Select a qualified mortgage broker
Using a mortgage broker, especially one with access to the whole market, could help save you money in the long run.
They’re experts in the field and will be able to assess your circumstances to understand which product is right for you, as well as being able to guide you through the entire process.
Shop around early
You can begin the process of remortgaging up to six months in advance. This means you could potentially lock in a new lower deal several months ahead of your new term starting, something which could be beneficial in the case of rates rising down the line.
If you’re planning to do a product transfer, there are usually no upfront fees to lock in a new deal ahead of your current deal ending.
However, if you’re planning to remortgage with a new lender, you may have to pay valuation, arrangement and legal fees upfront.
While you could be securing a great deal, the downside to this is that if interest rates fall further and you wish to back out and select a different deal, you may lose any upfront costs that you’ve already paid. You may want to check with your mortgage broker what the best option is for your situation and to confirm what the cancelling conditions are before the new term starts.
Check your credit score
This is best done sooner rather than later so that you can ensure you’re in the best place when the time comes to remortgage. There are many sites that will now let you check your credit score for free.
Once you’ve received your credit report, you can then look at ways to better your score ahead of applying for a new mortgage. If you’re not sure how to do this, again speak to your broker; they may be able to offer advice on how to raise your rating.
Be mindful of your remortgage date
It’s wise to be aware of your current mortgage term dates and know if there are any early repayment charges (ERC).
If so, you’ll want to avoid moving to a new mortgage product during this time so as not to incur any unnecessary fees.
Advice if you’re self-employed
Those who are self-employed and looking to remortgage will usually have to provide details of income that may include business accounts and tax returns. Check what evidence you’ll need and collate it ahead of applying. This may help your submission run more smoothy.
A straight-forward product transfer with the same lender may not require the same level of proof but you will need to check this before making the switch.