The Bank of England raised interest rates in September from 1.75% to 2.25%. This rise in interest rates as well as market uncertainty is pushing up the costs of mortgages. At the moment a lot of lenders are changing their products very quickly and aren’t keeping their rates for very long. The market is changing daily, even hourly, so if your current mortgage is within 6 months of expiry, I would suggest you look at options for new rates now to help secure the best deal possible. I have been asked a few common questions recently, so read on for the answers.
How does working with a mortgage broker help at the moment?
A mortgage broker or adviser can help you to find the best deal for you. I can provide advice on remortgaging or help with a new home or buy-to-let. As the market is so turbulent at the moment, you may have already been turned down for a mortgage and if you can’t get what you need, a mortgage advisor can step in. I will talk to you through your specific circumstances and help determine which will be the best deal for you based on them.
I am told by lenders if products are going to be suddenly pulled and can act on this very quickly to secure the deal or look for alternatives. I can search through products much faster than you would be able to and help with your application to give it more chance of success. A great example was yesterday I managed to secure a deal for a buy-to-let remortgage by having the initial meeting at 3pm and submitting all the paperwork on the evening ahead of the 8pm deadline, saving the client £95 a month.
Money Saving Expert Martin Lewis has been quoted to say “Check your existing company to see what it will give you and then mortgage brokers are worth their weight in gold right now.” He explained that for some people there may be a good reason for them to break their fixed deal, but added that it was “not right for everyone” and advised viewers to let a mortgage broker calculate the numbers.
What if I have been turned down for a mortgage?
Criteria that is used to assess a mortgage application varies by different lenders. A broker will understand these and therefore recommend which one is more likely to lend to you in your circumstances. Examples of these are if you are freelance or recently started a new job or even if you have a poor credit rating.
I’ve already got an agreement in principle, but how long does it last?
An Agreement in Principle (AIP) helps you understand how much you could borrow before you apply for a mortgage. It lasts between 30 and 90 days depending on the lender.
Can a mortgage lender pull an AIP or change the terms of the AIP once I’ve got the agreement in place?
Yes, a lender can change the terms if their criteria changes such as affordability. Lenders can change their criteria for mortgage approval at any time, even between the moment you received your AIP and the moment you make your final application.
With the majority of lenders, you are unable to secure a mortgage product until you submit the full mortgage application. An agreement in principle doesn’t usually secure a product.
It is worth remembering that although the market is turbulent at the moment, the interest rates are currently still lower than what they have been historically, and people can take advantage of that!
If you are worried about whether the rates will become unaffordable it could be better to fix for longer. At least then you know it’s at an amount you are comfortable with. I do feel reviewing your mortgage is important right now to mitigate any further increases as it is very difficult to predict exactly what will happen over the next few months.
Speak to me about your options today.
Note: Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage
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