Is it time to remortgage?

With building societies increasing their mortgage standard variable rates (SVR), is it time to remortgage?

For some time now, since the start of the credit crunch, many borrowers have opted to stick on the SVR offered by their mortgage company at the end of their mortgage deal rather than remortgage. Apart from anything else this has been because the SVR was better than the rate on offer to new borrowers and the Loan To Value (LTV) percentages had increased.

However, as Hannah-Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, says “Over the last month or so we’ve seen the market shift.  SVRs have increased, rates for new borrowers have been falling and we’ve seen an increase in the availability of mortgages even at higher LTVs.  The remortgage market is open for business once again.”

She continues “The prospect of an arrangement fee can be off putting, however, our analysis shows that even when taking the fee into consideration and provided you have at least 25% equity in your property, the vast majority of SVR deals do not compete with the top fixed rates. Taking time to work through the sums involved when deciding whether or not to fix your mortgage is crucial. Fixed rates aren’t likely to get much lower in the near future, so the quicker you act the better”

According to moneysupermarket.com figures,

• the best two year fixed rate mortgage, with fee included, is First Direct’s fixed rate 3.29 per cent deal with a £998 fee. Taking into account the initial arrangement fee, the actual cost of this mortgage would have an equivalent rate of 3.8 per cent after two years
• the best deal is Alliance & Leicester’s two year offering, which currently stands at 2.49 per cent with a £995 fee. Taking into account the initial arrangement fee, the actual cost of this mortgage would have an equivalent rate of 3.07 per cent – which beats all but seven SVR deals currently available.

Tracker and fixed rate mortgages are some of the most common types of mortgage, there are others, such as offset mortgages which may be worth considering.