UK mortgage rates have increased at their fastest pace in a decade, in the 6 months leading up to May, according to data from the Bank of England. With the next interest rate decision on the 4th August, the bank may very well decide to raise rates again, so the sooner you can fix a secured rate for your new mortgage deal, the better.
Typically, mortgage lenders will inform borrowers of new offers 2-3 months before the end of their existing fixed term, but you could act much sooner than this and lock in a better rate, 3-6 months in advance.
When looking to remortgage, it’s helpful to have all your documentation in order to speed up the process and make it as straightforward as possible. Prepare these a few weeks in advance, as your lender may want to see any, if not all, of the following documentation:
- Your last three months’ pay slips
- Your last three months’ bank statements
- Your last three years’ accounts/tax returns (if self-employed)
- Proof of bonuses/commission
- Your latest P60 tax form (showing income and tax paid from each tax year)
- ID documents (usually a passport)
- Proof of address (eg, utility bills or credit card bills)
Provided your application is accepted, you can arrange with the lender for it to begin as soon as your current deal ends.
The advantages of getting remortgage ready and securing a new deal in advance are –
By remortgaging in advance, you may be able to find a more competitive product and lower interest rate with a new lender. Lower interest rates may mean a decrease in your monthly repayments.
Secure additional borrowing
It may be possible to increase the size of your mortgage. You could also release some capital in your property to fund a home improvement project – this type of borrowing often has lower interest rates than a bank loan.
Reduce your term
Remortgaging could reduce your mortgage term. For example, if you remortgage following a five-year fixed rate over 35 years, you’d be able to reduce your term to 30 years, instead of resetting it back to 35 years.
Remember, that when it comes to remortgaging, the best thing you can do is be prepared and act early.