2023 is set for the highest number of mortgage renewals on record

According to new data from UK Finance nearly two million householders will be looking to remortgage their properties in the first few months of 2023.

The rush to remortgage to lower repayments as we went into lockdown and the vast increase in property sales fuelled by low stamp duty rates as we came out means 1.8 million homeowners existing deals will expire next month.

This is 36% more than in 2022 and will be the largest number of rates due for renewal since UK FInance started keeping records in 2017.

When these homeowners took out their last mortgage deal their interest rate would more than likely have been around or below 2% as the base interest rate set by the Bank of England was under 1%. This base interest rate is now at 3.50% and with a further review expected on 2nd February 2023, it could yet be higher before their mortgage is ready for renewal.

If this was the only strain on household budgets it may not be a concern. However, with high inflation affecting the weekly shop coupled with higher energy bills a significant increase in mortgage payments could make some homes unaffordable.

There’s no need to panic though as Vicky, one of our mortgage advisors explains, ‘There are so many different factors that influence the monthly mortgage payment you pay. Knowing what these are and how you can use them to reach a monthly figure you’re comfortable with is a key part of securing the best deal.’

What factors affect your mortgage payments?

A lower loan-to-value (LTV) rate will result in you being offered better interest rates for your mortgage. Ideally, anything below 80% is considered good and allows for more choice from a wider range of lenders. If your property has increased in value you might be in a better position than when you last remortgaged.

An increasing number of borrowers are extending the length of their mortgage term. Taking out a longer-term mortgage deal will lower your payments but it does mean paying more interest if you don’t later switch to a different deal. Initially, it can really help to reduce your monthly payment, and when finances allow you can switch to a deal over a shorter period.

Not all mortgage lenders are the same. Choosing a lender outside of those represented on the traditional high street can provide a better deal depending on your particular circumstances. Smaller providers, regional based building societies or those based purely on the internet can offer some very attractive deals that you wouldn’t necessarily find from your own searches.

How early can you renew a fixed rate mortgage?

Remortgages can be secured up to 6 months in advance, so at Poole Townsend we would suggest it's a good idea to start your research a month before this window. Despite there being a perceived reduction in mortgage products available there are still a huge number of different offers and it can be a minefield to work through which is the best one for you.

Vicky alongside Caroline & Lyn our other mortgage brokers, can steer you in the right direction and ensure you achieve a monthly payment amount that you can afford. Get in touch with us for a mortgage appointment in the new year.

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