Remortgage to cut your monthly payments

A bank or building society often offers introductory ‘teaser’ rates to new customers, either at a lower variable rate, or a fixed rate for an introductory period.

Once this is up, your monthly payments can rocket as your deal will likely revert to your lender’s standard variable rate (SVR) – which is usually much higher. 

Moneywise is here to search the market each week to find the most competitive deals for you, whether you’re looking to fix for a longer period or take out a variable rate product.

Get help finding the best mortgage for you

Our example mortgage hunter is looking to remortgage on their £200,000 property, and will be looking to borrow £100,000 over 15 years – so they’re looking for a 50% loan to value (LTV) deal. Our buyer has decided to pay fees up front to avoid being charged extra interest.  

Fixed rate mortgages

Moving to another mortgage provider will involve going through its application process and affordability criteria. Fixing you mortgage will protect you from future interest rate rises but you may incur fees in the process. Do your homework and make sure a new deal is worth it. 

Platform, up to 60% LTV, 1.73%
Fixed until 31 May 2019 then reverts to SVR (currently 4.74%)

This deal comes with no fees and £250 in cashback. Monthly repayments are £631 and the annual cost is £7,523. This reverts to a 4.74% SVR when the fixed rate expires.

Barclays, up to 50% LTV, 1.65%
Fixed until 31 May 2019 then reverts to SVR (currently 3.74%)

This is a 1.65% product, fixed until May 2019. Monthly payments are £628, giving an annual cost of £7,525. This product also comes with £200 cashback and is available up to 50% loan to value.

Long term fixes

At the moment it’s still relatively cheap to fix your mortgage repayments for the longer term. The best deals are available for well under 3%. However, monthly repayments are much higher than shorter fixes, so it only makes sense if you expect rates to rise in the next few years.

West Brom Building Society, up to 65% LTV, 1.99%
Fixed until 30 April 2022 then reverts to SVR (currently 3.99%)

The rate is 1.99% - fixed until 2022 and there’s no fees and £300 cashback. That’ll cost £643 a month and £7,704 each year. Our buyer will revert to a standard variable rate - currently 3.99% - after this fixed period.

First Direct, up to 60% LTV, 2.49%
Fixed for 10 years then reverts to SVR (currently 3.69%)

If you're willing to lock in for 10 years then this deal from First Direct comes with a low 2.49% rate £35 fee. The repayments will be £666 per month, or £8,013 on an annual basis.

Variable rate

If you think the Bank of England’s base rate is likely to stay the same or fall then a variable rate could be best for you. However, if these rates rise at any time you could be left out of pocket.

Coventry Building Society, up to 50% LTV, 1.25%
Variable for term

Coventry Building Society currently offers the cheapest variable rate deal at 1.25%. Monthly repayments are £610 with initial fees of £999 – this represents an annual cost of £7,395.

Interest-only

While interest-only offers can be tempting, you’ll need a solid plan to pay off the capital at the end of the loan. You should also factor into your decision-making the interest you owe won’t diminish as you won’t be paying off your debt as you would with a capital repayment mortgage.

Not all providers will lend on an interest only basis, so your best bet could is likely to get a mortgage via a broker. Indicative rates can be found in our mortgage comparison tool

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Your Comments

Need to update your article regarding interest only mortgages ....Yorkshire Building Society DO NOT  offer interest only mortgages !!  have just checked with them .... so your article is misleading !!