We’ve dug up the best remortgage rates available now to help you save money on your mortgage bills.
The Bank of England has hiked its base rate to 3%, the highest level for 14 years. And it’s expected the central bank will continue to raise interest rates over the coming months.
Policymakers have said rates could go as high as 5.25%, although that’s not guaranteed.
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The Bank of England is raising rates to try and control inflation, which is currently at 10.1%. It expects inflation to decline over the next six months, but that depends on geopolitical stability. If oil prices jump, for example, inflation could remain stubbornly high. The bank might have to be more aggressive as a result.
As such, now could be a good time to consider locking in interest rates at today’s level.
After all, mortgage costs are probably your biggest monthly expense. Locking in a lower rate today will minimise the impact of rising prices on your finances.
When you take out a mortgage, most providers will lure you in with a low fixed rate, which reverts to a standard variable rate (SVR) after a set period.
An SVR is tied to the Bank of England base rate (usually with an extra margin added on top).
More often than not, the SVR rate is more expensive than the offer rate you locked in at the beginning of the term.
The best way to get around paying these higher rates is to remortgage.
Remortgaging involves taking out a new mortgage on a property you own to replace the old deal, usually with your existing lender or a new one.
Taking out a new fixed-rate product will provide peace of mind and stability. Fixed rate deals allow you to fix interest rates for periods of two, five or ten years. You might pay a premium for the longer fixes, but this could be worth it for the stability trade-off.
According to the trade body, UK Finance, just over three-quarters of mortgages are fixed rate deals.
“Amid interest rate rises, fixing for the longer term may be an attractive choice for those who want peace of mind with their mortgage repayments. However, whether now is the time to take out a new deal really will depend on someone’s circumstances”, says Rachel Springall, a finance expert at Moneyfacts.co.uk.
“It is unknown whether borrowers would be better off coming out of their fixed mortgage deal early to refinance right now or wait and fall onto their revert rate because everyone’s circumstances are different. However, sitting on a variable rate does not guarantee peace of mind in the months to come.”
If you can time it right, the best time to remortgage is just before your old deal ends. That’ll take you from one fixed offer to another.
You can remortgage as many times as you like (as long as it's after the fixed period ends or you might have to pay a penalty) until you get towards the end of your mortgage.
The best remortgaging deals
Here are the best five-year fixed-rate remortgage deals currently available throughout the UK. Mortgage selection based on data from Moneyfacts.co.uk on 4 November 2022. Total cost figures are for borrowing £150,000 over a 20-year term and are rounded to the nearest pound.
Mortgages are subjective and other factors such as your borrowing history, income and credit score will affect what you’re offered.
Best for borrowing up to 60% LTV
First Direct – 5.34%
- Max LTV: 60%
- Product fee: £490
- Total cost over five years: £61,969
There are no valuation or legal fees to pay with this deal. You can make unlimited overpayments but, as with most mortgages, early repayment charges apply until the end of the initial deal period if you pay it off completely. First Direct also offers a deal with no fees but it has a higher interest rate of 5.59% so you’d end up paying £779 more over the deal period.
HSBC – 5.24%
- Max LTV: 60%
- Product fee: £999
- Total cost over five years: £61,975
This deal is just £6 more expensive over the five-year fixed-rate deal period than the First Direct one above. There are no valuation or legal fees to pay. You can make overpayments of up to 10% extra a year without charge. There are early repayment charges in the first five years. Unlike the First Direct mortgage, it’s only available to borrowers who are remortgaging.
Best for borrowing up to 80% LTV
First Direct – 5.44%
- Max LTV: 80%
- Product fee: £490
- Total cost over five years: £62,375
As with the First Direct deal for borrowing up to 60% of the property’s value above, there are no valuation or legal fees to pay with this mortgage. You can make unlimited overpayments but early repayment charges apply during the initial five-year period if you pay off the mortgage completely. In this case you’d pay 3% of the original loan amount to repay it in the first year and 2% after this.
HSBC – 5.34%
- Max LTV: 85%
- Product fee: £999
- Total cost over five years: £62,378
This deal only costs £3 more over the five-year fixed-rate period than the First Direct one above, even though its product fee is more than double, and lets you borrow up to 85% of the property’s value. There are no valuation or legal fees to pay. There are early repayment charges in the first five years but you can overpay by up to 10% a year.
Why should I remortgage?
People usually remortgage to save money when their initial deal ends and the savings can be significant. For example, if you were with Halifax paying its current standard variable rate (SVR) of 5.74% on a £150,000 mortgage with 20 years to go you would be paying £1,052 a month – a total of £63,120 over five years (assuming the rate stays the same over the five years – as it’s variable it could go up or down at any time).
But if you switched to the best five-year fixed-rate deal from First Direct above at 5.34% you would be paying £1,018 a month and it would cost you £61,969 over five years – a saving of £1,151.
However, as the cost of fixed-rate mortgages has gone up so much recently, some lenders’ standard variable rates are actually lower than the fixed-rate deals you can currently get or not much higher, so check whether you will actually save money by remortgaging once you factor in any fees.
Bear in mind that the base rate is expected to go up again, though, so taking out a new fixed rate will give you certainty about how much your mortgage repayments will be for the period of the deal.
How can I get the best remortgage deal?
Lenders offer a different set of deals for remortgages than for first-time buyers or moving home, although some may be available to all borrowers.
To find the best deal for you it’s a good idea to speak to a mortgage broker (find one on unbiased or vouchedfor) as they will be able to look at the whole available market. They will also have access to deals that aren’t available directly from lenders. Alternatively, you can use comparison sites, like Moneysupermarket, Uswitch, or our sister site GoCompare.
When you’re comparing deals you should look at the total cost over the deal period, which will include the cost of the fees involved, rather than just the initial rate.
The smaller the proportion of the property’s value you’re borrowing (known as the loan-to-value or LTV) the lower the rate you’ll pay.
Rupert is the Deputy Digital Editor of MoneyWeek. He has been an active investor since leaving school and has always been fascinated by the world of business and investing.
His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.
Rupert was a freelance financial journalist for 10 years before moving to MoneyWeek, writing for several UK and international publications aimed at a range of readers, from the first timer to experienced high net wealth individuals and fund managers. During this time he had developed a deep understanding of the financial markets and the factors that influence them.
He has written for the Motley Fool, Gurufocus and ValueWalk among others. Rupert has also founded and managed several businesses, including New York-based hedge fund newsletter, Hidden Value Stocks, written over 20 ebooks and appeared as an expert commentator on the BBC World Service.
He has achieved the CFA UK Certificate in Investment Management, Chartered Institute for Securities & Investment Investment Advice Diploma and Chartered Institute for Securities & Investment Private Client Investment Advice & Management (PCIAM) qualification.
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