For the first time since 2009 the Bank of England decided to increase the base rate of interest above 0.5 per cent, taking it up to 0.75 per cent.
As a result, the estimated 43 per cent of UK households with variable or tracker mortgages may well have discovered that the cost of their mortgage repayments increased following this move.
This rise may not be isolated. So how can homeowners avoid being caught out by another future rise in interest rates? Here are five things you can do to get a new fixed mortgage deal in place and avoid a potential increase on your monthly premiums.
Check your current deal
The first step to take is to speak to your current lender or broker, as you need to find out exactly how much you owe on your existing mortgage. You’ll also need to request a copy of your mortgage statement, this is so you’ve got your mortgage details to hand, which is what your adviser will need for a new application.
Something else that you should consider checking is whether you’re able to pay off your mortgage without incurring any early repayment charges (ERCs) and how long it is before you can repay the mortgage without paying these costs. The majority of lenders will allow you to get a new deal up to six months before your current deal ends, so it’s worth considering. After all, it could prove to be a small price to pay for a long-term saving.
Know the true value of your home
Your property may have increased in value in the time you’ve owned it, especially if you’ve made any significant improvements and renovations. Getting it revalued may mean an improvement in your loan to value ratio (LTV), the result of which could present you with a greater range of mortgage deals to choose from. Look to get a couple of independent valuations to help you grasp a better idea of your home’s value.
Get your paperwork together
You want the whole process to be as swift and smooth as possible, so make sure you’ve got everything in order for your broker or lender. If you’ve got everything to hand, your applications can be processed a lot quicker and you could get a deal through within three weeks, but only if you are organised.
Get to grips with your credit score
Your credit score is one of the most significant things that a lender will examine during the application process. The higher your score, the greater chance you have of being presented with the most options and the most competitive rates. It’s hugely important to have an understanding of your credit rating and to know how to improve it. Some simple steps to take for a quick boost to your rating include: having a landline phone number, registering on the Electoral Roll and making more than the minimum repayments on your credit card.
It’s quite straightforward to check yourself, with companies Callcredit allowing you to do a free credit check. If you feel your rating is low, you can still secure a remortgage deal - just be upfront with your adviser, so they can look at lenders who have packages to cater for such needs.