Need a new mortgage? There’s never been a better time to borrow

13th February 2015


If you’re mortgage is coming to an end or you’re sitting on your lender’s standard variable rate, act now because there’s never been a better time to borrow.


Banks and building societies are falling over themselves to get homeowners to borrow after the Bank of England governor Mark Carney announced that the base rare is unlikely to rise from 0.5%, where it has sat for almost six years, until inflation increases.


However, inflation looks set to drop further from 0.5% as the UK faces deflation.


According to two year fixed rate mortgages are around 1% and five year deals are around 2%. Of course the larger your deposit, or the lower the loan-to-ratio (LTV) of the mortgage the better the rate will be.


Those who own 40% of their home and want to remortgage will be offered the best deals.


However, for those trying to get on the housing ladder for the first time, while rates look good, they still have to pass tougher affordability rules.


Matt Sanders,’s mortgage spokesman, said: ‘First-time buyers and those looking to move house with a new mortgage should think about doing a personal finance audit before approaching a lender.


‘Check your credit file, work out your income and outgoings, make sure you could afford an increase on your mortgage should the rates rise and consider speaking to an independent mortgage adviser.’


He added that those remortgage should check the small print of the record low rates for large upfront fees.


‘Many products have substantial upfront non-refundable arrangement fees and as the interest rates have tumbled, these fees have risen,’ he said.


‘Factor those fees into any mortgage product you are looking to take out. There are some mortgage deals available without upfront fees, but beware that the interest rate son those products may not be as low. However, the slightly higher interest rate may be worth paying to avoid the upfront fee.’


Sanders said the different in an interest rate could make the different to whether a borrower is better off going for a lower rate of interest and a fee or not. This applies to those who are currently in a fixed rate mortgage as well, as they may be better off exiting the deal early and paying the penalty.


‘With the Bank of England base interest rate likely to remain at 0.5% or even lower throughout this year it’s still worth those who are on a fixed rate mortgage shopping around,’ he said. ‘The penalty fee you may have to pay to get out of your current deal could be offset by the savings you make in the long term for having a lower rate mortgage.’

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