I can’t believe it’s nearly the end of December already! So many people have had their Christmas trees and decorations up early this year. I must admit: I’m one of those people! But thinking I’ll probably take them down quite soon as well.
Christmas seemed very strange on all levels this year. I’ve been so busy recently with the rush of mortgage applications due to the stamp duty holiday, that I felt Christmas almost passed me by without even noticing!
January is likely to be very busy with the stamp duty ending and also with the changes to the Help to Buy scheme.
It’s really important to plan ahead so that you don’t run out of time and end up on your current lender’s standard variable rate, which can be very costly. I am sure you have read in the news that lenders are taking much longer to produce mortgage offers at the moment. The housing market is “set for the busiest December in over a decade as buyers rush to beat the stamp duty deadline”, according to Zoopla (quoted in a Mortgage Strategy article dated 25th November 2020), so you definitely need to allow more time.
The other thing to consider is that “UK average house prices increased by 4.7% over the year to September 2020, to stand at a record high of £245,000”. This is according to data published on the gov.uk website and relates to the House Price Index in September of 2020. If you’re not planning to move house, you may think this is not relevant to you right now but, if the value of your property has risen, that means you have more equity in your property. A lower loan-to-value ratio generally means a better mortgage offer. With house prices rumoured to drop in 2021 to coincide with expected rises in unemployment, it makes sense to secure the best possible rate while you can.
I think also that this renewal might be a bit different for a few people because of the pandemic. If your circumstances have changed and your income has reduced, your choice of lenders may be more limited. You’ll need to complete a new affordability assessment with a new lender. You may even need to consider switching to a different product with your current lender, even though it’s not the best deal on the market, but it will be cheaper than paying your lender’s standard variable rate.
Whilst the end of your fixed-term may not be imminent, now might be a really good time to get your financial ducks in a row. Even if you don’t plan on applying for a new mortgage until January, why not do some preliminary work? Check your credit rating. Get your documents together. And make an appointment with your advisor for January. You can then relax enjoy Christmas knowing you have a plan in place.
Maybe you don’t have a mortgage advisor?
Perhaps you’re confused by your renewal letter?
Just not sure of your options?
Feel free to get in touch. I will help you to make sense of your offer and, together, we can look at the whole market to find the most suitable mortgage for your circumstances. We can include your current lender in that search as well.
Well, I guess I’d better start thinking about New Year and see whether it feels any different to Christmas! 🙂