When there are rumours of rate cuts, how do you manage your remortgage? This is the question mortgage expert Darren Polson is answering in this week’s Ask the Expert
The Question
I’m due to remortgage in March 2025 but I’m looking at my options now. I’ve heard the Bank of England may reduce interest rates again in early 2025 so I am wondering whether it’s worth waiting until the last minute to see if I’ll benefit from any more reductions in mortgage rates before my current deal expires. What are your thoughts?
Darren’s Answer
There are so many variables that will impact whether rates will drop over the coming months.
Banks are not dependent on the Bank of England Base Rate as they will use swap rates when looking at mortgage lending. That said, it does give confidence.
Regarding your rate expiry, there are two main options when you are nearing the end of your current deal. Let’s break these down:
Remortgage to a new lender
A mortgage broker can search the market based on your outstanding mortgage balance and property value to see what rates are available to you.
This would effectively be a new mortgage application which can incur legal costs and other set up fees (your broker can ensure free legals and free valuation with certain lenders). Some lenders also offer cashback deals for remortgage cases.
There will be a credit-scored application and a full income / expenditure assessment.
Switch to a new rate with your current lender
This is classed as a rate switch or product transfer. The benefits of this are that there is almost never a credit score or requirement to provide proof of income as the lender has already assumed the risk with your current mortgage.
There is also no need to carry out a valuation as the lender will have their own internal valuation of the property which can mean your loan-to-value is positively impacted by the lender’s valuation, rather than market value. This could result in a better rate at this loan-to-value bracket.
Lenders’ rates are changing frequently at the moment, and this is an important decision to make.
It is always advisable to speak to a broker who can provide an assessment of your remortgage options and give you the best rates on the market for your circumstances.
In addition, a broker can check your deal again before your new rate takes effect to ensure this is still the best deal for your circumstances.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
