Remortgage to cut your monthly payments

Mortgage companies often offer 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. It can pay to shop around for cheaper deals from other lenders.

Of course, moving to another mortgage provider will involve going through its application process and affordability criteria. You may incur fees in the process so don’t make any rash decisions. Instead, do your homework and make sure a new deal warrants your time and efforts.

Get help finding the best mortgage for you

To help you with your research, we probe the market each week to find the most competitive deals for you, whether you’re looking for long- or short-term fixes, variable-rates, or interest-only deals.

Our mortgage hunter is looking to remortgage on his £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 any valuation or arrangement fees up front to avoid being charged extra interest.  

Fixes

Woolwich from Barclays has a 1.65% deal until April 2019. It also has no fees, and £250 cashback. Monthly repayments are £628 and the annual cost is £15,000. This reverts to a 3.74% SVR when the fixed rate expires.

Another good option is the two year fix from Skipton Building Society. This is a 1.74% product, fixed until March 2019. Monthly payments are £632, giving an annual cost of £7,560. This product also comes with £250 cashback and is available up to 60% 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 fixed-rate terms, so it only makes sense if you expect rates to rise in the next few years.

Coventry Building Society has the most attractive five-year term. The rate is 1.99%, fixed until 31 March 2022 and there’s no fee. That’ll cost £643 a month and £7,757 each year. Our buyer will revert to a rate of 4.24% after this fixed period.

Alternatively, Woolwich from Barclays also has a ten-year fix at 2.59% but it comes with a £999 fee and no cashback. Although the fee may sound expensive, it’s not too bad for a ten year fix. The repayments will be £671 per month, or £8,171 on an annual basis. The SVR is 3.74% when the fixed rate expires, assuming no changes.

Variable rates

Woolwich, Barclays’ mortgage arm, will lend at 1.44% over the Bank of England base rate for two years, currently 1.69%. That’ll cost £629 each month. There are no fees and £250 cashback, after that, the 3.74% SVR kicks in.

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 !!