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B-Advised Blog

Getting a mortgage and remortgaging: is now the right time?


With the UK currently in the midst of a cost of living crisis, we are all feeling the pinch, with most of us left to desperately search out ways that we might save money and reduce our outgoings. Many homeowners and prospective homeowners are particularly concerned about how rising interest rates will impact mortgages and remortgaging their homes.

In the mortgage market, affordability will certainly be significantly impacted due to the cost of living crisis, as lenders look to continue tightening their lending criteria in order to reflect increasing costs. Overall, this could result in a reduction in the overall number of loans on offer.

However, this does not mean that prospective first-time buyers and current homeowners looking to remortgage should refrain from acting now. In fact, you may be surprised to learn that quite the opposite is true.

Intrigued? Stick with us to find out more as we explore the impact of current economic instability on the mortgage market.

How will the current cost of living crisis affect first-time buyers?

In the current cost of living crisis, you may be wondering if buying your first home is still a smart objective to work towards. Here at B-Advised, we would recommend that you do not allow the current economic instability to deter you from your goals.

The most important thing for first-time buyers to be mindful of right now is that mortgage lenders are actively taking rising costs into account with their affordability calculations. This means that you ought to be especially diligent in managing your finances, perhaps for at least six months before you make your mortgage application. This will ensure that you can demonstrate a flexible budget that has the capability to absorb rising costs.

Of course, taking the time to prepare your finances and employing the assistance of a financial adviser (such as ourselves here at B-Advised!) early on in the process will certainly give you the best possible chances of securing your very first mortgage.

Stack of coins with miniature houses on top

Remortgaging your property

It’s not just first-time buyers who are in a muddle right now. Current homeowners may understandably feel at a loss too regarding remortgaging during such an unstable time.

However, if you are at the end of your current mortgage deal, or are already on your lender’s standard variable rate, remortgaging could be the best possible strategy to help you reduce your outgoings during the current cost of living crisis.

We recommend that if you are looking to remortgage your property, you should act now. Since interest rates began rising in December 2021, the cheapest deals on the market have been slowly creeping up in price.

Good deals are becoming increasingly few and far between as the market responds to rising interest rates. Shockingly, since December of 2021, the average rates on 2-year and 5-year fixed rate mortgages have almost doubled.

With the Bank of England suggesting that further increases to the cost of borrowing are on the way, the smartest thing that you could do would be to get ahead of the game and secure the cheapest possible rate now, with a deal that will come into place once your current fixed-rate ends.

Wooden blocks shaped as stairs with the letters RE MO RT GA GE

What happens if you don’t remortgage before your fixed-rate ends?

It’s essential that – during this time of economic turbulence and rapidly rising interest rates – you avoid being moved onto your lender’s standard variable rate (SVR). This is your lender’s default tariff and is the rate that you will roll onto automatically once your initial fixed rate comes to a close.

As the base rate of interest rises in the UK, so too will your lender’s SVR. This means that your repayments could become expensive and unpredictable.

According to a survey from Habito, it is estimated that one in every four UK homeowners is on their lender’s SVR. We would strongly advise that you avoid being lumped in with this demographic, and endeavour to organise your new deal prior to your fixed-rate ending, in order to ensure you do not move onto your lender’s SVR.

Remember that timing is key when remortgaging

Whether you are a prospective first-time-buyer, or a homeowner looking to remortgage, you will do well to remember that timing is key when it comes to navigating the mortgage market.

Here at B-Advised, we find that lenders tend to increase their rates immediately after the Bank of England implements a rise in the base rate. This is standard practice on the market. However, the key moment to strike – with your mortgage application or with your new deal as a current homeowner – may be in the weeks following this rise, when rates begin to decrease again ever so slightly as lenders seek to compete for business.

Feeling at a loss in the current economic crisis? We can help you to mindfully manage your finances and make the best choices for you. Simply get in touch with us today.