As we covered in part 1 of this two-part series, over 1.5 million people need to remortgage this year*.
That’s a significant number of people who are likely to be switching from a UK mortgage deal of years gone by, when borrowing was much cheaper and monthly repayments were much smaller.
For instance, the average 2-year fixed mortgage deal last month (March) was 5.76 per cent. In December 2021, it was 2.34 per cent+.
So, it’s not a question of will mortgage rates be higher in 2024? Everybody knows that the answer’s ‘yes’. The question is what can I do about increasing mortgage rates – and the answer is get mortgage fit and remortgage ready.
With that in mind, here are our concluding five tips from our team of Maidenhead mortgage brokers to help ensure that you get the best UK mortgage deal available to you when the time comes to get a new mortgage.
- Don’t disregard the deposit
Whilst this is the most obvious tip for getting a mortgage, it needs to be included as there are many benefits of having a bigger deposit. First of all, a larger deposit typically enables you buy a bigger (or more expensive, at least) property. However, if financially stretching yourself as far as humanly possible isn’t of interest, and you’re happy with a smaller (or less expensive) property, then a large deposit in relation to the overall value of the property you’re considering unlocks more deals and preferential rates. If you have savings that you’re willing to put forward as a deposit – even if you already have significant equity from past purchases – then it will benefit you in the long run.
- Make your paperwork work
As they say, to fail to prepare is to prepare to fail. And when it comes to paperwork, which, let’s face it, nobody likes doing, it generally tends to get put to the back of the … well, pile. Getting your paperwork ready in advance of submitting a mortgage application is the ultimate in mortgage preparation. If you’re using a good mortgage broker, then they should handle this aspect for you – our team of Berkshire mortgage advisers certainly will. However, having the key documents at hand when the time comes will stand you in good stead. These are: payslips, bank statements, SA302s for the last few years (if self-employed) and identification.
- Old accounts might cause new problems
Ever get those texts or letters from banks reminding you of an empty account you opened with them years ago – and then ignore them? We’ve all done it, however it’s worth keeping in mind that an out-of-date account may include out-of-date details, too. Not only that, but if a lender sees you still have access to credit facilities – even if you’re not using them – then you might be ‘marked down’. As part of general housekeeping, try and cull what you don’t use. There is perhaps one exception, though. If an unused account also happens to be your oldest account, then maybe think twice before closing it as longstanding accounts point towards financial stability – something that you definitely want to be displaying.
This one is slightly more niche, but it’s worth remembering if you’re about to apply for a mortgage. We all know that paying for insurance monthly is more expensive than paying for it in one go. Yet many take the monthly payment option as it means you don’t have to sink a large amount of money at once. However, there is also another cost. If you opt to pay for insurance monthly, what’s known as a hard search (a review of your credit record) is carried out, which may affect your credit score – particularly if it happens around the same time as your mortgage application. If you can afford to pay it one go, whether that’s car insurance or buildings and contents insurance, we would recommend it. This doesn’t apply to health-based insurances such as income protection, life cover and critical illness, as they are always paid by monthly Direct Debit.
- Ditch the debt
Paying off debt with savings is ALWAYS a good idea, unless the rate of interest on your savings beats the rate on the amount you’ve borrowed – which is very unlikely. Of course, nobody likes to part with cash. And many people would rather have debt, and pay the interest required to service that debt, than use their savings to pay it off. We understand why that might be, but if you have too much debt in the lenders’ eyes, then they’re unlikely to want to pile any further debt on you. So, if you can, use those savings to clear or even reduce your debt.
If you’re about to apply for a mortgage but unsure of how your credit report stacks up, or would like to ask any question when it comes to remortgaging, our team of Maidenhead mortgage advisers can help.
Contact the team directly on 01628 560820 or by emailing enquiries@altonmortgages.co.uk for expert mortgage advice in Berkshire.