Fixed Rate Mortgage - You Must Do This Now
Fixed Rate Mortgage - You Must Do This Now
Fixed rate lending, fixed rate mortgages. Pretty much all the commercial mortgages and buy to let finance we do is on fixed rate, the majority of that is fixed for five years.
The question is, what do you do when that rate is about to expire? More important, what should you do well before that rate expires?
This video covers:
Why acting early could be the biggest cost saving you'll make this year
Why leaving it late can really hurt
Why waiting for a fixed rate to expire is leaving it too late
Narrative:
Expiring Fixed Rates. The most common period for any fixed rate borrowing is five years. The bit that always catches our clients is just how short a period of time five years is, it goes quickly.
Historically, base rates of interest have been low, very low. That has meant many borrowers have been relaxed about fixed rates expiring and happy to review matters later in the day.
The times, quote Bob Dylan, they are a chang’in.
The chances are if you have a five year fixed rate buy to let or commercial mortgage due to expire anytime in the next 12-18 months, I would look at it now rather than wait.
There are two good reasons for doing this. One, whilst fixed rates and base rates don’t follow each other, it is fair to assume that the cost of borrowing for the lender will increase and that cost be reflected in the fixed rates on offer.
The second reason is that it takes time to remortgage and we are seeing that time stretch out as solicitors are busy and valuers a little nervous about the property market and economic outlook.
I have always said the best time to borrow is when you don’t need to, it still applies.
If you leave it until your fixed rate is about to expire your options will be more limited. Most lenders will advise you of the upcoming end of your fixed rate around six months before. I think you should be looking at your fixed rate much earlier.
Let me give you an example. In the last year of your fixed rate there may be no early repayment penalty, or there may be a 1% penalty to repay early. Either way the cost to break your current fixed rate is not punitive. If you can get a fixed rate 0.5% cheaper by doing that now you recover the cost in two years and benefit for the rest of the fixed rate term.
There is sense in doing things early.
Fixed rate buy to let and fixed rate commercial mortgages. Act early, give yourself more options, control your costs and be a little smug for doing it right.
Timings
00:28 - Why times are changing and interest rates are changing with it
00:39 - Why you should always act early
00:48 - Why fixed rates are moving
01:28 - Why you can win by acting early
02:07 - Acting early means more options, means better options, means a happier you
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