Maximizing Savings: Is It Time to Remortgage Early?

remortgage early

The recent announcement by Nationwide Building Society of significant rate cuts has sparked the interest of homeowners looking to save on their mortgage repayments. For those who locked into higher rates earlier this year, the prospect of lower monthly payments is enticing. But, is it worth considering remortgaging early, even if it entails an early redemption charge? Let’s delve into the details and find out when the right time to “stick or twist” might be.

Nationwide’s rate reductions, effective from the coming Friday, span two, three, and five-year fixed-rate products, targeting new customers, first-time buyers, and those opting to remortgage. The cuts range from 0.06% to 0.31%, with the lowest rate standing at 4.29%. These changes mark Nationwide’s eleventh reduction in four months, highlighting their commitment to staying competitive in the ever-evolving mortgage market.

If you’re among the homeowners currently locked into higher rates, the question becomes: Is it financially viable to remortgage before your fixed-rate period concludes, even with the looming threat of an early redemption charge? Let’s break it down with a real-life example.

Suppose you are currently paying £1,200 a month on your mortgage, and the early redemption charge stands at £5,000. However, with the new rates announced by Nationwide, your potential lower monthly payments could be £950. In this scenario, a simple calculation reveals that you stand to make a substantial saving over time, offsetting the early redemption charge.

While the prospect of reduced monthly payments is appealing, it’s crucial to consider the specific terms of your mortgage agreement and weigh the potential savings against the early redemption charge. Crunch the numbers, taking into account your current rate, the redemption charge, and the new lower rate. If the savings outweigh the charge, remortgaging early could be a financially savvy move.

The Nationwide rate cuts extend to various categories, including first-time buyers and existing customers moving home. The reductions are particularly attractive for remortgage options, with reductions of up to 0.31% for two, three, and five-year fixed-rate products up to 90% LTV. This move is part of Nationwide’s strategy to remain competitive and ensure that existing customers receive rates that are the same or lower than remortgage equivalents.

In a market that is continually evolving, Henry Jordan, the director of home at Nationwide Building Society, emphasizes the institution’s commitment to competitiveness. He states, “These latest changes mark our eleventh reduction in four months with rates now starting from 4.29%. In a continually moving market, we always aim to remain competitive across the board for first-time buyers, home movers, and those looking to remortgage.”

The decision to remortgage early involves a careful consideration of the potential savings versus the early redemption charge. With Nationwide’s significant rate cuts, homeowners have a valuable opportunity to reduce their monthly payments. It’s a “stick or twist” situation where crunching the numbers will guide you towards the most financially advantageous decision for your individual circumstances. As the mortgage market continues to evolve, staying informed and considering your options can lead to substantial long-term savings.

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