In 2020 we saw the Bank of England reduced the base rate of interest to 0.1% – the lowest in it’s history and indications show that it is likely to continue at this rate or we may even move into negative interest rates (see our article, What happens to your mortgage if there are negative interest rates).
Is now a good time to find a new mortgage?
With low interest rates in mind, it could be a good time for new buyers to go for that new home purchase they have been planning, however, bear in mind the closure of the Government Stamp Duty holiday at the end of March 2021. Current home purchases can take around 12 weeks so it may be not be feasible to get to completion before the deadline.
For existing homeowners now is a good time consider remortgaging, if your current agreement allows. If you are coming to the end of your fixed rate period (usually 2 to 5 years) then you will now be able to remortgage and get a better deal, which could potentially save you money on your monthly payments. Ideally you want to start shopping around at least 4 months before your current deal finishes and Choice can assist you to see if you can get a better deal than that offered by your current lender.
Alternatively you may be thinking that you would like to do some home improvements, convert an attic for a home office or build a conservatory. Reviewing your mortgage can allow you to borrow more money and take advantage of low interest rates.
How the low interest rates will affect different mortgage types in 2021
Here is a quick overview of the interest rate predictions in 2021 for different mortgage types:
- Tracker Mortgages: If you have a Tracker mortgage, which typically follows the BOE base rate plus a set amount, you are likely to have seen the reduction with the base rate cut in 2020.
- Fixed rate mortgages: If you are still within the initial period of your fixed rate mortgage, you may not be able to remortgage due to early repayment penalties. However, if your fixed rate period is coming to an end, now might be a good time for you to remortgage for a more competitive deal to help save you money. Get in touch with us at least 4 months before your rate ends to get the maximum options available to you.
- Standard Variable Rate mortgages: If you are currently on your lenders standard variable rate then you could take advantage of a more competitive rate. Unless you need maximum flexibility with no tie in period or early redemption payments, contact us to review your rate and discuss all the options available to you.
- Prospective buyers: Now is a good time to find a competitive fixed rate mortgage deal whilst interest rates are low. More and more deals are returning to the market so even those with smaller deposits can get back on the property ladder. However, the larger the deposit the more likely you are to qualify for deals with the lower interest rates. Speaking to a mortgage adviser, like Choice, can help you find the best deals and get the most out of your resources to secure the finances for your new home.
Choice Mortgage Solutions Can Help You Find the Best Mortgage Deals
As mortgage experts, we have access to many mortgage deals and lenders which you won’t find on the high street. Get in touch with our team to discuss your requirements and allow us to explore the mortgage market for you, which could help you save money in the long run. Contact us via our website or call the team on 0800 612 8099.