AA Mortgages are provided by Bank of Ireland UK
Why should you think about remortgaging?
No one likes to think they're throwing money away but planning ahead can avoid this. Remortgaging at the right time could save you money. If you're not sure what the right choice is for you, it's best to ask for mortgage advice – AA Mortgages advisers are happy to help.
Is your current fixed-term mortgage due to end?
Usually the interest rate you pay will revert to your current provider's standard variable rate (SVR) when your fixed term finishes. Your provider determines their SVR and it can change at any time.
Currently the Bank of Ireland SVR is 4.49%.1 In comparison, the interest rate for the 2-year fixed-term, 85% loan to value (LTV) AA Mortgage is 1.75%2, with a £1.495 fee.
It's easy to see how you could save money with a lower interest rate. However, there may be other costs to consider when switching your mortgage – these can include redemption fees, product fees and other mortgage application fees.
Moving to your current provider's SVR could increase your monthly payments depending on your situation.
Has your fixed term already ended?
Chances are you're now paying your current provider's standard variable rate (SVR). You could save money by remortgaging to a new deal, as a fixed-term mortgage is likely to have a lower interest rate.
Let's look at an example repayment mortgage of £232,295, with a mortgage term of 21 years on which interest is charged monthly.
If you're paying a SVR of 4.49%, your monthly payments will be £1,425.303. However, if you switched to the 2-year fixed-term, 85% LTV, AA Mortgage product with a £1.495 fee, the interest rate is 1.75%. This means your monthly payments will be £1102.303 for the fixed term, which is a saving of £323 per month during the fixed term.
Will interest rates continue to rise?
While it's difficult to predict if interest rates will go up, it's true that since the Bank of England interest rate increased in November 2017, some mortgage rates have risen. If you're on your current provider's SVR or a mortgage linked to the Bank of England base rate, you may be better off remortgaging and knowing the rate is set for the length of your fixed-term.
Find out more
Your home may be repossessed if you do not keep up repayments on your mortgage.
1 Bank of Ireland UK Standard Variable Rate correct as of 12 April 2018
2 AA Mortgage rate correct as of 19 April 2018
3 Source: Bank of Ireland UK. Correct at 11 April 2018. Monthly payments assume any product fees are paid upfront and based on a capital repayment mortgage. Full saving based on 24 months of payment savings and assuming that the SVR paid doesn't change over the fixed-term period.