Property Remortgage decisions

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For months the press have told us that mortgage loan rates cannot go any lower. And yet whilst rates at 75% and below have hardly changed for months I have noticed that rates at the higher loan to values (95% to 80%) are slowly coming down. This I believe is due to an increased number of lenders entering these markets and the need for these lenders to be up there with the best priced products in the market. In the last week alone I have had emails from three major lenders stating they are looking to re-price the higher loan to value products. The table below gives an indication of some of the leading rates available in today’s market:

Rates available through LIFT-Mortgages
Loan to Value (%) Purchase or Remortgage 2 Year Fixed 3 Year Fixed 5 Year FIxed
95 3.99% n/a 4.69%
90 2.63% 3.13% 3.39%
85 1.94% 2.34% 3.05%
80 1.64% 2.15% 2.59%
75 1.55% 2.14% 2.55%
70 1.54% 2.09% 2.49%
65 1.45% 1.99% 2.34%
60 (and below) 1.44% 1.94% 2.23%

Whilst it is important to remember that the Bank of England base rate will not be low forever you can see there is some real value in the market.

Selecting the deal that is right for your situation is important. It’s tempting to look for the lowest rate available to you and choose a provider on that basis, but it’s important to consider your future plans. The factors I encourage my clients to think about are:

  • How long do you see yourself living in the property for? Most fixed rate deals charge a percentage based fee if you cancel the deal before the end of the fixed rate period. Whilst almost every high street lender will allow you to move the mortgage from one home to another during the fixed rate period, I would personally plan my mortgage products around my future life plans as much as I can.
  • Do you plan to make any improvements that may add value to your home?  Most clients initially want to fix in for longer periods and I don’t think many could argue that five year rates are fantastic value at the moment. However, improving your home could change the Loan to Value ratio so a five year fix may not be in your interests. For example, if you borrow at 90% LTV and you plan to do a lot of work to the house, will this significantly increase the value and therefore lower your LTV ratio? If so, do you really want to fix in for five years at 90% rates when in two years you may be able to take advantage of the better rates that come with lower LTV?

Discuss your future plans with an experienced broker to make sure the mortgage deal you choose is right for tomorrow not just today. If you’d like to talk to us call 0161 929 2626 or email david.baker@lift-financial.com

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