7 things to consider when remortgaging post Covid

Did you know that on average there are almost 40,000 homeowner remortgages every month in the UK? And that despite the coronavirus pandemic remortgaging can be a great way to save hundreds if not thousands of pounds a year?

If you’re thinking about remortgaging and wondering what coronavirus means for your mortgage, then this post is for you!

Our fixed rate mortgage term comes to an end later this year and one of the worries lurking at the back of my mind since the start of the pandemic is what Covid means for us when it comes to remortgaging.

Like many families we’ve been affected by Covid financially, and what with headlines about the state of the economy and the UK mortgage market it can be easy to get carried away worrying. So, what do we need to think about when remortgaging post Covid? This collaborative post sets out seven things to consider!

7 things to consider when remortgaging post Covid

1. The value of your property

The UK might have spent the last year in the grips of a global pandemic, but house prices are actually up in most parts of the country and Rightmove predicts they will rise by 4% in 2021. Establish the true value of your home by getting it valued by more than one estate agent. The more your property is worth, the lower the loan-to-value (the size of the loan against the value of your home) on the remortgage, meaning the lower the interest rate. If you’re not sure what your loan-to-value ratio is use a free LTV calculator like simon conn to work it out for you.

2. Has your income been affected by the pandemic?

If your income has gone down as a result of the pandemic it might affect your ability to change mortgage lender. However, it shouldn’t prevent you from negotiating a new and better deal with your current lender. Mortgage Calculator UK has a remortgage calculator to help you work out the cost of remortgaging based on your own personal circumstances. It’s also unique in that it has graphs to show your loan repayments and monthly and yearly amortisation tables to show how your repayments will pay off your mortgage.

3. Remember loyalty doesn’t pay

Research by the Financial Conduct Authority found that 800,000 of us are missing out on an average of £1,000 a year by not switching our mortgage to a better deal. They also discovered some longstanding customers pay more than existing customers in a number of markets, including mortgages. So, when it is time to remortgage, shop around and switch to a new lender if you can to get the best possible rate.

4. Check the fees

Remortgaging isn’t just about the interest rate – make sure you consider the fees too. For example, a bank or building society may appear to have the lowest interest rate on the market but that offer may come with a hefty fee. In contrast, a bank or building society with a higher interest rate may come with no fee at all.

5. Seek independent advice

We are both self-employed and used a mortgage broker who specialises in the self-employed when we first became homeowners. Her expertise meant we got the best possible deal, and we’ll be turning to her again for that expertise when we remortgage later this year.

6. Start the process sooner rather than later

Many lenders have withdrawn products and experts predict more could be withdrawn as the year goes on. At the start of the pandemic Which? reported that UK banks withdrew more than 900 mortgages in a week, making it better to search for a better deal sooner rather than later.

7. Don’t panic!

Sensationalist headlines and dire predictions about recession and the economy can seem frightening, but with interest rates having dropped to historic lows of 0.1%, now is actually a wise time to fix your mortgage rate. The cheapest rates have remained largely the same and while it might take a little longer to process your application due pressures of the pandemic, there are deals to be had.