What should I do about my mortgage and should I overpay? As interest rates soar, we answer the key questions
- Many lenders allow securing a new rate up to six months before fixed deal ends
- A lender’s standard variable rate is usually their most expensive deal
- Some brokers say they are now starting to recommend more variable deals
What should I do?
Many lenders allow borrowers to secure a new rate up to six months before their fixed deal ends.
If you wait until closer to your remortgage date, rates could be even higher.
Those with more than six months to go are typically charged an exit fee to switch. But if rates do rise fast, it may work out cheaper in the long run to pay this and get a new deal early.
However, don’t do anything without first seeking advice from a broker and asking them to compare what offers are available.
Many lenders allow borrowers to secure a new rate up to six months before their fixed deal ends. If you wait until closer to your remortgage date, rates could be even higher
On a standard variable rate?
A lender’s standard variable rate is usually their most expensive deal.
They also typically move up and down in line with the base rate, which means your repayments are likely to increase further if the Bank of England increases the base rate as expected. So if you have rolled on to this, contact a broker to find out if you could save by switching to a new deal.
Are variable deals better than fixed?
Some brokers say they are now starting to recommend more variable deals, such as trackers. These could end up being cheaper than fixed deals, which are becoming more expensive ahead of expected rate rises.
But you must be able to afford the risk. If you do not have any flexibility in your budget, you may want to stick with a fixed deal that offers peace of mind that your repayments will stay the same for a set period.
Should I overpay my mortgage?
Most lenders allow you to overpay your mortgage balance by up to 10 per cent each year. If you can afford to do this now before rates rise further, it could reduce the amount of interest you pay overall and help you clear your debt faster.
Source: Read Full Article