Did you know you can lock in a new mortgage rate up to 6 months in advance?
In the recent past, there wasn’t much pressure to secure a mortgage rate ahead of time. With rates as low as 1%, many homeowners and investors felt comfortable waiting until their current deal expired before locking in a new one. However, times have changed. Mortgage rates have fluctuated significantly in the last few years, reaching heights of 8%. Fortunately, we’ve recently seen some reductions, offering a glimmer of hope that more favourable rates could return.
Is it worth waiting to secure a new rate?
The short answer is no – locking in a rate early offers numerous benefits. It provides you with flexibility, ensuring you can secure a competitive rate without the stress of last-minute decisions. By locking in early, you create a window of opportunity. If rates drop before your current product ends, you can often switch to a lower rate. If they rise, you’ll still benefit from the lower rate you’ve already secured. It’s a win-win scenario that grants you peace of mind and protection in an unpredictable market.
Right now, we’re facing a critical moment with a new government in place and the Autumn budget looming on October 30th. The pace of rate reductions is slowing, and some lenders are already restructuring their products to adapt to the changing landscape. This is precisely why preparation is essential. By securing a mortgage offer that remains valid for up to 6 months, you position yourself to benefit from future rate drops while safeguarding against any sudden increases.
Consider the impact of rate changes. After the 2022 minibudget, we saw some lenders increase their rates by as much as 2% within a single month. On a £100,000 mortgage, that 2% rise could translate to an extra £167 per month in interest payments. For larger mortgages, the impact is even more significant. This demonstrates the importance of staying proactive. As a mortgage adviser, I manage this process for my clients, ensuring that they secure the best available rate in advance while carefully monitoring the market for potential changes. By doing so, I help clients avoid unnecessary costs and seize the best opportunities.
Capital Repayment vs. Interest-Only Mortgages
When choosing between a capital repayment and an interest-only mortgage, it’s essential to consider your financial goals. With a capital repayment mortgage, you steadily reduce the outstanding balance, which increases your equity over time. This is a great strategy for homeowners looking to build long-term financial stability.
However, for buy-to-let investors, maximising profit is often the key priority. In this case, an interest-only mortgage can be more advantageous. While you won’t be paying down the mortgage, you will still benefit from property price appreciation over time. This can free up more cash flow to reinvest in expanding your portfolio, enabling you to grow your portfolio quicker.
The beauty of this strategy is its flexibility. You aren’t locked into one approach forever. At each remortgage point, you have the opportunity to reassess your financial situation and decide whether to stick with interest-only or switch to capital repayment. This allows you to adjust your strategy as your financial goals evolve, offering both flexibility and control over your investments.
Why I’m Best Placed to Help You
Navigating the mortgage market, especially as a buy-to-let investor, requires more than just knowledge of mortgage products—it requires a deep understanding of the property market as a whole. With my background in estate agency, I offer a unique perspective that allows me to see the bigger picture.
For instance, I understand not only how mortgage rates affect your finances, but also how property market trends, rental demand, and property values play into your overall investment strategy. This holistic view allows me to provide advice that’s not only realistic but tailored to your specific goals as a property investor.
The buy-to-let market is constantly evolving, with tax changes, regulatory shifts, and market fluctuations all playing a part. Staying ahead of these changes is vital if you want to maximise your returns. By working with me, you’ll have a trusted adviser who not only understands the current landscape but also anticipates future trends, giving you the best chance of success in a competitive market.
Request a call back from Billy Thomas and let him help you take control of your financial future by securing the best mortgage product, keeping you informed of market developments, and ensuring your investment strategy is aligned with your long-term goals.
M A S O N S is a leading letting agent in Hitchin, covering rental and buy-to-let properties in Hertfordshire. Founded on award-winning lettings experience, we specialize in property management, buy-to-let in Hertfordshire, and residential lettings – drop us a line at [email protected] or call us on 01462 557477.
Please note: this article should not be interpreted as legal or financial advice.
