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People coming off sub 1 per cent mortgages

Journalist: Callum Mason, i

ended 06. June 2023

Lots of mortgage customers signed two year fixed deals at less than 1 per cent when mortgages were cheaper in summer 2021 and many will be coming to re-mortgage now - facing far higher rates.

Mortgage brokers - do any of your clients fit this bill? And would they be free to speak to us? 

What guidance would you give to someone about to be in this situation, facing monthly payments £100s higher than currently?

4 responses from the Newspage community

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Editor
Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Our advice to clients is to consider extending their mortgage term which will reduce monthly payments. There could also be opportunities to make overpayments to bring their loan-to-value down to the next bracket which will have more competitive rates. For clients that have cash savings, if appropriate some of this could be used to make an overpayment as what they are earning in interest may be some way less than the new mortgage rate they'll be moving onto.
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Editor
Emma Jones
Managing Director at Whenthebanksaysno.co.uk
If a mortgage customer signed a two year fixed deal at less than 1% during summer 2021, they likely benefited from historically low interest rates. However, as their fixed term comes to an end, they may face significantly higher rates when remortgaging.To mitigate the impact of higher monthly payments, mortgage brokers may recommend that their clients:

1. Start shopping around for a new mortgage deal several months before their fixed term ends.

2. Consider longer fixed-term deals, such as five or ten years, to lock in a lower rate for a longer period.

3. Consider switching to a different type of mortgage, such as a tracker or variable rate mortgage, depending on their financial circumstances.

4. Look for lenders who offer cashback or other incentives to help offset the cost of higher monthly payments.

5. Seek advice from an independent mortgage broker who can help them navigate the remortgaging process and find the best deal for their situation.
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Kylie-Ann Gatecliffe
Director at KAG Financial
My advice would be to speak to a good broker well in advance of your rate finishing. It’s easy to ignore bad news in the hope it will go away - but the truth is being prepared with your remortgage is the best thing you can do. We start looking at our clients six months ahead of their end date - to give them plenty of time to consider their options and plan ahead. Most people will be facing an increase and getting to grips with your spending will help soften the blow. Most of us will waste money each month - we live in a modern world of endless subscriptions, food on demand and next day shopping at our finger tips. By going through your bank statements and looking for things you can cut back on really does add up quickly. I did this with a client recently and we found £210 that was being wasted just on subscriptions not being used. But for those really struggling working with a good broker will ensure all options are explored to ensure your mortgage is affordable.
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Austyn Johnson
Founder at Mortgages For Actors
I'm one of them! Cant wait...

Advice? Get in touch with your broker, find the best deal that you can obtain. Even if you cant save more than £10 a month, thats still £240 over the next 2 years. At the risk of sounding like a supermarket - Every Little Helps