The mortgage market is changing – and so are people’s lives. Take advice now from a Chase de Vere adviser on how to get the best out of your mortgage arrangements in 2022 and beyond.
If getting on top of your finances is one of your New Year’s resolutions for 2022, don’t overlook your mortgage arrangements. For most of us, our home loan represents one of the most significant financial commitments of our lifetimes, yet too few people review their mortgage regularly. If that’s you, don’t delay any longer – an overhaul of your mortgage could unlock significant savings, enable property improvements as your life changes, or give you an opportunity to move home.
On the first of those possibilities, there has never been a better time to think about cutting the cost of your mortgage repayments. For one thing, higher inflation is set to squeeze everyone’s finances over the next 12 months. The Bank of England expects inflation to rise to around 5% by the Spring – against its target of 2% – with a sharp rise in energy prices affecting almost every household in the country.
Moreover, time may be running out to secure the best mortgage deals. In December, the Bank of England raised interest rates for the first time in three years; its base rate, at 0.25%, remains remarkably low, but economists expect further rises over the course of this year.
Inevitably, mortgage providers will reprice their loans as the base rate increases – some have already begun to do so. However, the good news is that even if you’re currently locked into a mortgage deal with exit charges for early repayment, it may still be possible to secure a new home loan at today’s prices. Many lenders will allow you to lock into today’s deals even if you’re not ready to remortgage for up to the next six months; that could be crucial to avoid missing out on the cheapest deals.
Other mortgage borrowers may have different priorities for the coming months, as they continue to adjust to the way their lives have changed. In particular, the widespread switch to home working seen during the pandemic is expected to endure, even after the threat of Covid-19 recedes. According to one recent study, two-thirds of companies have developed a hybrid work model where people spend only part of the time in the office.
In which case, you may now feel you need to make changes to your property; you might want to renovate to create a home office or additional living space, for example. If several members of the family are now spending more time at home, creating enough space for you all to work, rest and play in harmony may begin to feel like a necessity rather than a luxury.
Remortgaging could be a way to raise the money you need to pay for such home improvements, particularly if you are able to take advantage of rising house prices to unlock an additional advance. Average house prices in the UK rose by almost 10% over the course of 2021 according to Halifax Bank; that could enable you to secure additional mortgage borrowing against your property without increasing the size of your loan as a proportion of your property value, which will help keep costs down.
Alternatively, maybe 2022 is the year in which you want to move home. It could be that you feel you have now outgrown your property – if your family circumstances have changed, say, or if you’re spending time at home. Equally, you may feel your home is now larger than required; perhaps children have moved out, for example. Downsizing may make sense – and unlock cash for another use.
Either way, you’ll need to consider your mortgage arrangements carefully if you’re considering making a move. You may need to take on additional borrowing in order to buy a larger property, or you may be keen to pay off mortgage debt if you’re moving somewhere smaller. Looking at how best to manage your existing mortgage and any new loan is a crucial part of moving home.
Bear in mind that these are just some of the most common reasons to be thinking about reviewing your mortgage as 2022 gets underway. These are unusual times – both economically, as we begin to look towards the end of an unprecedented era of ultra-low interest rates, and societally, as the world continues to cope with the twists and turns of the pandemic.
The key is to get high-quality advice on what the best option might be for you, given your individual circumstances and objectives. Chase de Vere offers a completely free initial consultation with specialist mortgage advisers who can help. You’ll only pay a fee – no more than £499 – if you decide to go ahead with a new mortgage.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate tax advice
Content correct at the time of writing and is intended for general information only and should not be construed as advice.