The Bank of England monetary policy committee is due to meet on November 2 and while we have become used to interest rates remaining at 0.25 per cent, there is speculation that a 0.25 per cent increase may be announced.
The news is significant for people looking to buy new homes as a rise in interest rates will lead to an increase in the cost of mortgages, particularly those looking to take an advantage of a variable or tracker mortgage.
Brian Murphy, head of lending at the Mortgage Advice Bureau, has advised buyers to act quickly to take advantage of the current interest rates.
“An interest rate rise of 0.25 per cent will take the bank rate up to 0.5 per cent, which is still a very low figure. However, even just the hint of an interest rate change has already prompted a plethora of lenders including Barclays, Natwest, Nationwide, Halifax and Santander to withdraw some of the lowest rates that were previously available on the market, and a rate rise would undoubtedly have a further impact on product availability.”
The time before the next monetary policy meeting provides an opportunity for first-time buyers and those looking to remortgage to access the best possible rates.
While the speculation around the interest rate rise has resulted in some appealing products being removed from the market, there are still opportunities available for first-time buyers to act quickly.
To access the best mortgage rates it is vital for home buyers to be organised and be able to complete an application before any interest rate rise is confirmed. With time constraints in place, having the necessary documents ready for submission to a broker or lender is vital, as missing out on rock-bottom rates could cost tens of thousands of pounds over the term of a mortgage.
So, what do you need to provide to ensure a quick and easy mortgage application process?
According to the Mortgage Advice Service (MAS), before applying for a mortgage it is advisable to contact credit reference agencies and get your credit reports, making sure there is no incorrect information about you which may hamper your application.
Then comes the time consuming and often frustrating part – collecting your documents. In today’s digital world it is easy to forget that obtaining paper copies of documents can be slightly tricky. Luckily, MAS has developed a quick and easy checklist that includes:
- Utility bills
- Proof of benefits received
- P60 form from your employer
- Your last three months’ payslips
- Passport or driving license (to prove your identity)
- Bank statements of your current account for the last three to six-month
- Statement of two to three years’ accounts from an accountant if self-employed
- Tax return form SA302 if you have earnings from more than one source or are self-employed
- Self-employed people should look to provide information alongside their tax return, which supports what the SA302 says about their income, such as bank statements
To find out more about the mortgage process for first-time buyers take a look at Leeds Building Society’s helpful cost checklist.
Those who already have a mortgage have a similar opportunity to save thousands by completing a remortgaging process as quickly as possible before an interest rate rise is implemented. But how do out go about it in such a short timeframe?
The first step is to speak with your current mortgage provider to establish exactly where you stand with your current mortgage and how much is still owed, as well as if any early repayment charges may apply.
A mortgage statement will provide the majority of information you need, as well as giving you all your account details. The next step is investigating the best offers in the market and beginning the process to take advantage of low interest rates ahead of the predicted interest rate rise in November.
Use our mortgage calculator, created with the Mortgage Advice Bureau, to work out the best deal for you.