Seeking Mortgage Advice?
It’s that time again – we are due to hear about a possible interest rate change later this week. But which way is the rate going to go or will it stay the same?
The simple answer is that it is hard to predict, due to a multitude of factors. However, inflation HAS dropped quicker than expected, which is good news, so the base rate may not change and could hold steady at 5%. If it DOES increase, it’s unlikely to hit the heights previously feared.
BUT! That doesn’t mean you should just wait and see – speak to Mashroom Mortgages today to lock in a deal at the current interest rate. If it goes down, we can find you a new deal. If it goes up, you’ve got a better deal locked in.
What should landlords be thinking about?
Things are moving very quickly and changing all the time. In the last few years Fixed Rates have been very popular.
However, if you feel that rates might go down, a Tracker or a Track and Fix product might give you the peace of mind that you are not going to be left high and dry if rates go down, but also gives you the ability to fix it if rates start to increase again.
If your mortgage is coming to an end in the next 6 months, you might be understandably worried about the impact current rate increases will have on your mortgage repayments. About 6 months before your existing product comes to an end, your current lender will send you the options available if you stay with them.
We recommend contacting a Specialist Mortgage Adviser to check the details, terms and conditions of the offer from your existing lender and will explain the pros and cons to you.
They will then talk to you about your plans and check the market for a better solution. If a better solution is found they will be able to submit an application to that lender and secure you that rate and if not, they will advise you to accept the option from your current lender.
If rates decrease and a better option becomes available they will contact you to discuss the merits of changing over to that option.
What is happening in the market today?
Looking at the market today, a 5 year fixed rate is lower than a 2 year fixed rate; and a 10 year fixed rate is lower than a 5 year fixed rate. This means that the lenders predict that in the long-term, interest rates are going to come back down.
We can understand why people want to wait until rates come down before committing to a deal, but that’s a really dangerous thing to do as the lender’s SVR will always be much higher than the base rate, so if you plan on waiting until rates come down again, a tracker rate might be a good option.
This will give you a degree of control over your mortgage payments and a small slice of relief from the high-interest rates offered through fixing. A tracker mortgage offers some transparency as to what homeowners will be paying each month and you should enjoy a relatively low mortgage rate, they are cheaper than opting for a fixed rate and some tracker are without an ERC, giving you the option to move over to a fixed rate at a later date.
We have seen tracker rates as low as 0.01% above the BOE base rate.
In uncertain times like this, it’s more important than ever to talk to your broker to help you make a decision as there are a lot of interesting products out there apart from fixed rates.
How can you prepare your advisor?
Right now, lots of lenders are offering exclusive products at lower than average rates. These only have a limited amount of funds, and once these funds are allocated they are GONE.
So your advisor need to be in a position to apply as soon as these options come up and the best way for you to ensure this happens is to get all of your documents over to me as soon as you can. They will generally need:
- Proof of ID
- Proof of Address
- Last 3 Months Payslips (if employed)
- Last 2 years Tax calculations and Tax Year Overviews
- Last 3 Months Banks statements
Once they have these, if a limited product comes up they can get it applied for as quickly as possible and save you money!
