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Remortgaging For Contractors

With mortgage applications surging, even in these unprecedented times, as a contractor it’s natural to wonder: Am I getting the best deal? Could I use some spare funds? Am I paying more than I need to be? One solution many homeowners are increasingly looking to is remortgaging. The 2020 Natwest remortgage survey, found that 3 […]

By Tom Jones on 18 Nov 2020
Read time: 4 minutes

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With mortgage applications surging, even in these unprecedented times, as a contractor it’s natural to wonder: Am I getting the best deal? Could I use some spare funds? Am I paying more than I need to be?

One solution many homeowners are increasingly looking to is remortgaging. The 2020 Natwest remortgage survey, found that 3 out of 4 homeowners say remortgaging has had an overall positive impact on their lives. Whether that’s because of the opportunity to save money, build funds or simply make their mortgage work better for them, it’s making homeowners happier. 

Remortgaging – The Basics

Remortgaging is often a good way to reassess your mortgage situation and make it more efficient. Often mortgages begin on a promotional rate typically fixed for 2 or 5 years. When this introductory rate comes to an end, you’ll automatically move onto your lenders Standard Variable Rate (SVR), which is often more expensive than your promotional rate.

This doesn’t mean you’re tied to that new rate. Your lender is obligated to write to you ahead of your current rate ending. Giving you the opportunity to swap a more competitive rate. However, you shouldn’t wait for your lender to contact you. We recommend looking into your options at least three months before your current deal ends.

What Are The Reasons To Remortgage?

Raise Additional Funds

With house prices rising this year, your house could be worth more now than when you originally took out your mortgage. With this in mind, you could raise more funds than you might have anticipated through a remortgage.

Remortgaging can be an opportunity to raise additional funds for debt consolidation, special occasions, home improvements, etc. Homeowners typically use these extra funds for renovating a home office, installing a new kitchen, or building a conservatory.

Save Money

We know 2020 has had a big effect on our financial wellbeing. Remortgaging can be a great way to save money by reducing your payments.

As mentioned, you will be moved onto your lender’s SVR. You risk higher monthly repayments than may be necessary for your property and your circumstances if you do nothing.

Research the market and review your mortgage deal to save yourself money.

When Should You Think About Remortgaging?

There’s no bad time to think about a remortgage, even accounting for early exit fees, you might not be on the best rate – and you could save yourself a lot of money – by remortgaging mid-term, depending on your circumstances.

Take advantage of the low rates whilst they’re here

2020, whilst turbulent, has featured the historically low base rate set by the Bank of England. With the rate now down to just 0.1%, borrowing is more affordable now than it has been in some time – the caveat is that returns on savings will be less as well. 

Your mortgage deal is coming to an end 

With the end of your current deal in sight, it’s a great time to think about remortgaging. Most people will naturally start thinking about remortgaging at this stage and it’s a perfect opportunity to look at the market and re-examine your current deal. There may well be a better rate out there for you.

If your house is worth a lot more now

Your house could be worth more than it was when you set your current mortgage deal with house prices rising at a rapid rate this year.

You may find you’re now in a lower loan-to-value (LTV) band, this means you could be eligible for lower rates. A remortgage can be an excellent way to look at lowering your rate and saving money. 

Keep in mind

You may encounter early exit fees if you’re not at the end of your deal – whilst exit fees are something you should definitely consider before changing deals, it could be that the associated savings with your new mortgage rate or putting the additional funds raised to good use is worth accounting for the potential charge.

Now it’s due for renewal ask

  • Does it still work for me?
  • Could it raise funds to pay for that dream kitchen, or the loft conversion, or garden office?
  • Could the equity consolidate debts elsewhere and make them easier to manage and your financial commitments more comfortable to live with?
  • Would the lump sum pay the deposit on a second property?

Remortgaging can make life easier and help facilitate those long-term goals

With a remortgage, you could raise the funds to help make your dreams a reality. Here at Nixon Williams we partner with the experts at CMME, who specialise in getting contractors the best deal when it comes to remortgaging. If you would like to learn more, set up a free mortgage consultation.

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