Over 55 and Among the One in Four Missing Out by Not Remortgaging?

New research shows that more than 70% of homeowners haven't considered remortgaging. That’s despite an average £439 savings a month available to them.

Yet remortgaging deals currently available are some of the lowest in the last 10 years.

These Statistics are Important if You’re Aged over 55.

They show that mortgage providers have failed to contact over 8 million (72.6%) borrowers with an offer of an updated deal.

For those over age 55, it’s even higher. Over 78% have not heard from their lender. Of these, 40% have been on the same mortgage deal for more than ten years.

Remortgaging Away from the SVR

The FCA (Financial Conduct Authority) has coined the term ‘mortgage prisoners’ in its latest review of the mortgage market.

It also says about 30% of borrowers are failing to find the most affordable remortgage deals for them.

It wants to make it simpler for these borrowers to check what remortgaging products they’re eligible for.

The FCA says its analysis of data from 2016 has found some 800,000 mortgage holders on ‘reversion rates’.

By this it means the standard variable rate (SVR) a mortgage slips to at the end of its discount or fixed-rate period.

SVRs are currently well above the base rate. They’re also far more expensive than the current choice of fixed rate deals.

So if this sounds like your situation, what should you do? First, grab this opportunity to look at your options to take control and make savings.

For most people, a mortgage is their biggest monthly outlay. A small reduction on your borrowing rate could mean saving hundreds a year, or thousands over the lifetime of your mortgage. That’s even after you’ve taken into account arrangement, legal and valuation fees.

Appeal of Remortgaging Fixed Deal

If you’re not planning to move home soon, then a remortgaging fixed deal might be a sensible option. Fixed rates account for the majority of new mortgage deals being taken out (over 80%, according to UK Finance).

If you’re someone who can recall the 14% interest rates of the late 1980s, you can see the appeal.

And while interest rates are relatively low now, we’re seeing a gradual hike. Rates are predicted to increase further over the coming two years.

Five-year fixes are currently more popular than ever before. The trend is driven by borrowers’ desire for certainty of control over their finances.

Demand has also been influenced by borrowers understanding that mortgage rates are close to rock bottom. Homeowners are grabbing the chance to secure these while they can.

When shouldn’t You Remortgage?

  • You’ve almost paid your mortgage off. Once your loan drops below £50,000, it’s unlikely to be worth your while if you factor in the arrangement fees. You’ll also have a smaller choice of lenders to consider as some don’t accept remortgages below this sum.
  • You’d be hit by an early repayment charge. This won’t be relevant if you’re on the SVR but if you’ve another fixed or tracker arrangement it might. So do your sums before working out if it’s worth remortgaging.
  • Your employment status has altered. Maybe you’ve retired or gone self-employed. Both these situations could affect your remortgaging potential. If you took out a mortgage before 2014, you wouldn’t have been subject to the strict affordability checks that mortgage lenders now have to carry out. You can find out more about these here.
  • Your home's value has gone down. This is unlikely if you’ve had your home for over 10 years. Most people in this situation have significant equity accrued. You have very little equity.
    • Your credit record isn’t squeaky clean. Lenders are more choosy about who they lend to. The Financial Conduct Authority also obliges them to check your ability to pay. That’s not just at current rates, but at a higher rate too, to ensure you could cope if interest rates were to rise.

    If you feel remortgaging is the right decision for you, make a start by reading our ‘Get Remortgage Ready’ checklist here.

    If you’d like advice on finding the most cost-effective product for remortgaging for your circumstances, you can get in touch with us here: Remortgaging Department.

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