After the global economy crashed in 2008, many homeowners became prisoners to their existing mortgages. So much so that they found remortgaging difficult, if not impossible.
Post-credit crunch, banks and building societies tightened their lending criteria. Because of these higher barriers to entry, when homeowners looked to remortgage, many found they couldn’t.
But, after a few years of ‘austerity’, things improved. With low interest rates and lenders’ leniency, even COVID was only a blip to remortgaging capacity.
Then Liz Truss and Kwasi Karteng happened. One disastrous effect of their short tenure was to drive mortgage interest rates through the roof.
Today, homeowners are still suffering. Many now coming off their introductory rate face a steep incline in their monthly remortgage repayments.
So, what if you’re sat on a sub-2% deal and the best rate you can get today is closer to 5%? Let’s look at your options.
October 2024: rates are coming down…slowly
If you were to believe the headlines, you’d think lenders were in a race to the bottom with their current interest rates. They’re not.
Yes, some lenders have breached the 4% introductory rate marker. But those deals are almost all at 60% LTV (40% deposit/equity). Many are also only for homemovers and ‘brand new customers only’.
But rates are coming down, even if slower than borrowers would like. So, what is the reality?
The immediate future for average remortgage interest rates
Many of our clients have been holding for lower rates before they remortgage. Some are even suffering their lender’s SVR in the interim. I shudder to think how much they’ve paid in additional interest that they needn’t have.
And whilst it’s true that some lenders have broken the sub-4% bookmark, average mortgage rates are nowhere near that. Whilst the Bank of England Base Rate hovers around the 5% mark, we’re unlikely to see wholesale movement downwards.
The market’s been so quiet, lenders have been working on slim profit margins to attract mortgage and remortgage business. They won’t work on those type of margins indefinitely. So, even if the Base Rate drops, it doesn’t mean we’ll automatically see mortgage rates drop in tandem with it. The market will go through a period of readjustment.
The biggest problem, then, is that many looking to remortgage today are coming off a substantially lower-rate deal than what’s available today. It’s this reticence to pull the trigger that’s caused the remortgage hesitancy we’ve seen these last 12-18 months.
But, I’m pleased to say, we now have win-win remortgage options for contractors: our rate-monitoring service!
Remortgaging options: rate monitoring service
Our new rate-monitoring service allows you to lock in a remortgage interest rate up to six months before your current deal is set to expire.
I know: you’re saying, “What’s the point of doing that if rates are falling?”
That’s the beauty of this service. It doesn’t matter what rate you lock in, we guarantee it’s the most you’ll pay.
If rates go up, should the world fall off one of the many global tightropes we seem to be walking, don’t sweat it. You’ll only pay the rate you lock in when you adopt our service.
Here’s the magic, though.
Do nothing, but still potentially get a lower-rate deal
Remember, we’re a 100% independent, family mortgage broker. No lender is off-limits to us. We’re not beholden to a panel of lenders like many brokers are. That means we can scour the entire market for the best deal for you (not them).
If we see the rate for a like remortgage deal drop during your lock-in period, we’ll automatically switch you onto it. You won’t have to lift a finger.
We get the alert, check it against your locked-in deal. If the new rate’s lower, that’s what you’ll pay.
If you’re interested in this service, sign up to our rate-monitoring service on Freelancer Financials. Fill in the 30-second form, hit submit, and one of our experienced brokers will get back to you to start the conversation. It’s that simple.
What else works in your favour as a contractor homeowner
As a contractor, it’s easy to underestimate your bargaining power. When it comes to remortgaging a property, remember: you’re sitting on an asset.
Lenders are chomping at the bit to get your next round of mortgage finance. If your current mortgage repayments are in order, we can help you get that new deal on your existing home.
Unlike obtaining a first-time buyer mortgage, remortgaging can be a painless process. Since you took out your mortgage, your:
- contract day rate may well have improved;
- home may well have increased in value (depending on where you live);
- perfect repayment history with your current lender will have made your credit history more desirable.
These positives reflect in the fees, admin and turnaround compared to a first-time buyer, for example. If you want to remortgage now, you could:
- get an instant decision in principle (after one phone call);
- borrow up to 95% of the value of your existing property;
- use your daily contract rate to calculate your remortgage affordability (not accounts!);
- incur no legal fees on many of our remortgage products;
- get discounted or zero set-up fees on certain mortgages;
- pay no standard valuation fees on several mortgage deals;
- be confident, knowing that you have a dedicated mortgage advisor with you every step of the way.
A few more reasons why you should call Contractor Mortgages® today
There are many potential and common pitfalls for contractors looking to remortgage. We help you avoid them all, without you having to fork out thousands for the privilege.
Our priority is to secure you the most competitive deal on the market. As independent specialist mortgage brokers, we can.
Our knowledge of the best remortgages out there for contractors is second to none. That’s how we’ll often know which lender is right for your situation after the first conversation.
Above and beyond all those benefits for you, our service also includes:
- favourable underwriting terms for umbrella and limited company contractors (and freelancers);
- a saving of up to £500 with our low broker fee;
- choices of remortgage deals from the entire market, not just one or two lenders;
- affordable mortgage protection & critical illness policies, tailored to your new mortgage;
- an impressive 4-8 week turnaround, from application to completion.
Our lenders now cater for a vast array of trading structures. Whether you’re self-employed, a partner, or a limited company or umbrella contractor, we can help.
There are many good reasons to remortgage your home. Debt consolidation, home repairs and improvements or just because you want a better rate.
Don’t let High Street lenders tell you that you can’t afford to. We know you can and, using your contract day rate, you’ll get a competitive rate, too.
