With interest rates fluctuating and the cost of living rising, many homeowners are exploring remortgaging as a way to potentially save money or secure more manageable repayments. If you're considering remortgaging in 2025, understanding when to make your move is crucial to maximising these potential savings. Here's what you need to know to get ahead of the game.
Why Remortgage in 2025?
Remortgaging is the process of switching your current mortgage deal to a new one, either with your existing lender or a new provider. It can offer numerous benefits, such as:
Lower interest rates - secure a better deal if market rates drop.
Fixed monthly repayments - opt for a fixed-rate deal to safeguard against future rate hikes.
Access to equity - release funds for renovations, debt consolidation, or other financial goals.
The decision to remortgage should be carefully timed to ensure you’re not paying more than you need to or missing out on potential savings.
What’s the outlook for 2025?
With expectations of declining interest rates and modest growth in the housing market, the mortgage outlook for 2025 appears favourable for borrowers.
Interest Rates and Mortgage Costs
In November 2024, the BoE reduced its base rate to 4.75%, following a previous cut to 5% in August. These reductions have led to a decrease in mortgage rates, with the average two-year fixed-rate mortgage at 4.52% and the five-year fixed-rate at 4.39% as of November 19, 2024.
Forecasts suggest that by the end of 2025, average mortgage rates could fall to around 3.5% for five-year fixed deals and approximately 3.8% for two-year fixed deals.
Housing Market Trends
The UK housing market is expected to experience modest growth in 2025. Rightmove forecasts a 4% increase in average asking prices over the year, driven by sustained market activity and anticipated reductions in mortgage rates.
Similarly, Savills projects a 4% growth in UK property values in 2025, with a cumulative increase of 23.4% over the next five years. This growth is expected to be supported by steady cuts to the base rate, improving affordability for buyers.
These factors create opportunities to secure better mortgage terms, but timing is everything.
When Should You Remortgage?
The timing of your remortgage depends on a few key factors:
1. When your current deal ends
Most fixed-rate mortgage deals come with an early repayment charge (ERC) if you switch before the end of the term. Typically, your lender will notify you 3-6 months before your deal expires. This is the ideal time to start exploring remortgage options to avoid being moved onto the lender’s standard variable rate (SVR), which is often significantly higher.
2. Interest rate trends
If interest rates are expected to fall, it may be worth waiting a little longer to secure a better deal. Conversely, if rates are likely to rise, locking in a fixed-rate mortgage sooner could save you money over the long term. Keep an eye on updates from the Bank of England and consult a mortgage advisor for guidance tailored to your circumstances.
3. Your financial goals
Consider your reasons for remortgaging. Are you looking to reduce monthly payments, pay your mortgage faster, or release equity? Align your timing with your goals. For example, if you’re planning renovations, timing your remortgage to coincide with your project's start can give you quick access to funds.
4. Your personal circumstances
Your credit score, income stability, and outstanding debt will all impact your remortgage options. You might qualify for better rates if you’ve recently improved your financial situation. On the other hand, if you anticipate financial changes, such as switching jobs or starting a family, consider locking in a deal before your circumstances change.
How to Prepare for Remortgaging
1. Review your current mortgage
Check the details of your existing deal, including the term, interest rate, and any early repayment charges. This will help you understand your options and decide whether remortgaging is worth it.
2. Improve your credit score
Lenders offer the best rates to borrowers with high credit rating. Pay off outstanding debts, make all payments on time, and avoid taking on new credit in the months before your remortgage. If you are unsure what your credit rating is, you can check it here.
3. Gather documentation
You’ll need proof of income, bank statements, and details about your current mortgage. Being ‘mortgage document ready’ will speed up the application process.
4. Compare deals
Work with an independent mortgage advisor to find the best deal for your needs. Look beyond the interest rate; consider fees, flexibility, and overall mortgage term costs.
Book an appointment with a Mortgage Consultant
Navigating the remortgage process can be complex, but you don’t have to go it alone. Skyline Mortgage Consultants can help you take control of your mortgage.
Review your current mortgage and calculate potential savings
Understand market trends and identify the right time to remortgage
Compare lenders and negotiate terms
Talking to us costs nothing. Simply book a free online remortgage appointment with Tony at a time that suits you.
Your home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. A fee may be charged for mortgage advice. The amount will depend on your circumstances.
Skyline Mortgage Consultants Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Skyline Mortgage Consultants LTD is registered in England and Wales Number 8157062. Company Registered Office: Heathmans House, 19 Heathmans Road, London SW6 4TJ.