How to lower the cost of fixed rate mortgage borrowing in 2023
How to lower the cost of mortgage borrowing when your fixed rate expires.
What to expect in 2023 and how to reduce your borrowing costs.
#commercialrealestate #fixedrate #smallbusiness #mortgage #financebroker #finance #financetips
https://limeconsultancy.net
I want to update you on what we are seeing from lenders with regard fixed rate borrowing due to expire in 2023.
There are a lot of fixed rates due to expire and borrowers will suddenly be exposed to the increases in interest rates that occurred in the second half of 2022.
The challenge for many borrowers will be whether the income from property or their business is sufficient to cover the new repayments on the new higher interest rates they will be experiencing.
It goes without saying that this is a problem for borrower and lender.
On this note, I am pleased that we are seeing some pragmatism come to the fore, but that doesn’t mean clients can afford to leave looking at their options until fixed rates expire, the best solutions are always found by doing these things well in advance.
With commercial and mixed use property we are seeing a couple of things happen.
Number one is that lenders in this sector are offering to port expiring loans onto new fixed rates which tend to be a little below their advertised rates, this is good news and probably reflects the fact that lenders have an issue if they don’t work with the borrowers they have. It’s good news and I’m pleased to see this happen.
Number two is that we have the government backed recovery loan scheme still running in 2023. It seems to be the forgotten child in all of this. The scheme works with property lending between £250k and £2m, we are seeing interest rates on this scheme 2-3% lower than borrowing elsewhere in the market.
What this means is that there are solutions that definitely qualify as being sensible for borrowers who want to refinance, purchase, capital raise or take cash out of a property to support their business or grow their portfolio.
It also provides borrowers with an alternative to simply refinancing with their current lender.
Both these options would not typically be expected in a time of some economic uncertainty and rising interest rates. It is cause to be positive.
It is worth tempering my comments by saying that these facts don’t apply to all lenders equally. My number one tip for any borrower with a fixed rate expiring is do things earlier than you have ever done before.
Make sure to follow us on social media and for anyone with a fixed rate on the horizon please get in touch.