As some landlords delay refinance plans while waiting for mortgage rates to come down, we examine the savings you’re missing out on by not remortgaging.
Money market volatility has seen mortgage rates rise and fall drastically over the last two years. However, we’re now in a period of stability, with rate pricing continuing to soften.
Whilst rates have come down, we’re unlikely to see a return to the historically competitive lows we saw post-pandemic. Despite this, many landlords and property investors continue to delay their remortgage, hoping that rates will come down even further.
The consequence? Many landlords are paying their lender’s Standard Variable Rate (SVR), which is undoubtedly much more expensive than the current remortgage rates on the market.
But if rates do come down, surely it’s more cost-effective to delay your remortgage than lock in a current rate?
Saving on a remortgage vs. paying your lender’s SVR
Say you have a remaining mortgage (interest-only) of £275,000; let’s look at how much you could save by remortgaging compared to paying your lender’s SVR.
The current average SVR is 8.5%. If you pay this for the next two years, that amounts to £46,700, with monthly mortgage payments of £1,945.
For a standard remortgage on a straightforward case, the average current mortgage rate for an individual is 4.36%* with a £1,749 lender arrangement fee. This works out to be £999 per month, or £27,722 over the same two-year period, including the fee.
Landlords will understand that you save more by remortgaging than staying on the SVR, so let’s assume the Bank of England Base Rate (BBR) cuts as follows: A 0.25% reduction in February, then 0.25% every four months thereafter.
If you wait to arrange your remortgage until BBR is at 3.5%, the total you could pay on your lender’s SVR would be £41,010. By delaying your remortgage, you’d miss out on a saving of £13,288 over the next two years.
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Will mortgage rates come down?
Mortgage rates will continue to soften, but pricing comes down much slower than it increases. You could save substantially across your property portfolio by reviewing your mortgage rate options now.
Use our FREE buy to let mortgage calculator to explore the top mortgage rates available on the market. You can search based on rate pricing and fees to explore the type of deals you could access. Once you’ve found a product you’re interested in, simply click ‘Send me more details’, and one of our experts will be in touch.
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Speak to an expert
If you’d like to discuss your remortgage plans with our team, call us on 0345 345 6788 or get in touch here.
*Average rates as at November 2024 and for illustrative purposes only. To find out which rate you could access, please speak to our team.
