BA’s blueprint to go upmarket again – Financial Mail:
WHILE the housing market may look frothy, mortgage rates remain exceptionally low.
It means home movers can fund any new purchase with cheap mortgage finance, especially if they have equity in their current home that they can use to fund a deposit.
David Hollingworth, of L&C Mortgages, says fixed rate mortgages ‘dominate the popularity stakes’ because of the payment certainty they provide.
Best deals range from 1.24 per cent (HSBC) for a rate fixed until the end of August 2026 with a maximum loan-to-value of 60 per cent – to 1.95 per cent for a rate fixed until October 2031 from Virgin Money (again at a maximum loan-to-value of 60 per cent).
Someone purchasing a £240,000 property would pay a monthly sum on a 25- year repayment loan of £ 558.48 and £ 606.85 respectively.
This assumes a £96,000 deposit and a loan of £ 144,000. Both loans come with arrangement fees of £999.
However, grabbing a cheap mortgage should not be the preserve of movers.
Those happy to stay where they are should also ensure their mortgage remains fit for purpose, especially if they have a large chunk of equity in their home.
Caroline Manson is a chartered physiotherapist. She and her husband Tom, a Commodore in t he Royal Navy, have j ust remortgaged their five- bedroom house near Dorchester, in Dorset, which i s valued at about £1 million. As a result, the couple have locked into a lower payment rate – 1.24 per cent fixed with Barclays as opposed to the 1.41 per cent variable they were paying previously. They also now have certainty over what they will pay for the next five years. Caroline, 55, and 53-year-old Tom used L&C Mortgages to get them the best deal. ‘We now know what our major household expense will be – and that is key for us,’ says Caroline. ‘ The new loan also allows us to pay off 10 per cent of the debt every year and that is what we intend to do.’ The remortgage came with an £899 arrangement fee although this cost was largely mitigated by a free valuation and a £250 cashback upon completion. One word of warning. Hollingworth says that those home-owners whose income has been adversely affected by t h e p a n d e mic may struggle to remortgage to a new lender. Their best route, says Hollingworth, is to see what alternative deals their existing lender may be prepared to offer.