Ask Annie: 'Is now the right time to make my move to a better mortgage?'


Q: I have an uncompetitive mortgage rate but have put off switching to a better deal as my home is on the market and I am planning to move to a bigger place and will want to increase my borrowings. So my original idea was to change mortgage when I changed my house.

However, I am now thinking I should not wait. I am worried by analysts predicting that UK interest rates are set to rise. If this happened, it would be more expensive for me to move to a new fixed-rate deal.

What advice can you give? In addition, if I were to remortgage now, would I be able to increase my loan in the near future?

AA, Warwickshire

A: Ray Boulger of mortgage broker John Charcol says: "I think you are wrong about rates. While experts were predicting a rise not so long ago, the last meeting of the Bank of England's Monetary Policy Committee left rates where they were at 5.75 per cent, and the question now is not if they will fall but how soon."

As far as fixed deals go, the price of these is determined by the "swap rates" at which banks lend to each other. Mr Boulger points out that two-year swap rates peaked at 6.33 per cent in July and are around 5.7 per cent now, so they have fallen too as the market has reassessed what is happening in the wider economy.

Mr Boulger's view, then, is that there may be no harm in waiting to choose your fixed mortgage when you actually move. However, there is a proviso. Mr Boulger says the housing market is quieter than it has been recently, so it is possible you could have to stay put longer than planned. "It might therefore still be worth remortgaging if you can get a better deal now," he explains.

"Most loans these days are portable and you would be able to take it to your next house as long as you still qualify for it in terms of job status, income level and mortgage loan-to-value."

As for remortgaging now and then increasing your borrowing when you move, this should be possible but Mr Boulger points out that it is essential to check out the terms and conditions of the new loan.

"If you take out a new fixed-rate mortgage, you could simply get another loan from your lender to top up to the amount you need to buy the next property," he says.

But choosing to top up your existing mortgage could mean you end up with different end dates for your different deals – a so-called "staggered finish" – and have to go on to the lender's standard variable rate for part of the loan until the other part catches up, which could prove expensive.

A worse prospect is that you no longer qualify for a top-up loan when the time comes to move – for instance, if the amount you need to borrow for the new property is too high to meet the lender's criteria. Similarly, if your job status has changed, you could be turned down by your lender or end up paying a higher rate for a self-certified loan.

In the worst case of having to start again with a new lender, you might also face early-redemption charges on your first loan.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
New Articles
i100... she's just started school
News
news
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
voices
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam