Is it time to fix your mortgage rate?
Freelancers with initial fixed or tracker mortgage schemes that have now come to an end are having to consider current low fixed rates as an opportunity to ensure repayments stay affordable when base rates begin to rise again.
In the past or should I say pre-credit crunch, coming to the end of your mortgage term was a nail biting prospect as lenders standard variable rates (SVR) often guaranteed a sharp increase in monthly repayments. The emphasis then was to source a better rate for our freelancers in a bid to save them from a hefty rate hike.
However, with the lowest Bank of England base rate in over 300 years, many lender SVRs are actually lower than the fixed rates that we arranged for clients 16 months ago. For some freelancers this now means that coming to the end of their mortgage term is actually something celebrate!
Safe bet or missing out?
Whilst it is all to easy to stay on your lenders SVR, happy in the knowledge that you are saving money on your repayments, you could be missing a trick. With base rates at an all time low, fixed rates that lenders are currently offering are also the lowest they have been in a decade.
Don’t play the waiting game too long
Recent research by Alliance and Leicester revealed that 81% of mortgage owners that are currently on their lenders SVR have no immediate plans to remortgage to a better rate, whilst 14% are waiting for interest rates to rise before looking for a better deal.
Whilst it might seem tempting to stick to your lenders SVR it could result in rapidly rising repayments and a lack of competitive fixed rate options when you do decide to switch. The lenders have already started to raise their fix rates. See previous blog entries “Freelancer Borrowers Be Warned” and “Interest Rate Outlook”.
The best fixed rates, by definition, will rise ahead of the actual base rate because lenders use forward modelling to price their products
With industry professionals speculating that the base rate will rise next year, so called ‘SWAP’ have climbed dramatically in the past 7 days. See previous blog entry “Fixed mortgage Rate Increase”.
Fixed deals that have been as low as 3.0% may only be available for a limited period so we could very well be a ‘buy now while stocks last’ situation.
Help securing a freelancer mortgage
To find out the best way to proceed with your current (or future) freelancer mortgage, simply go to Freelancer Financials, the mortgages speacialist for freelancers.
