Should I Wait to Remortgage Until Rates Drop?

As mortgage rates begin to decline, homeowners are faced with the decision of when to remortgage. One individual, who secured a two-year fixed-rate mortgage at approximately 6 percent in November 2022, is contemplating whether to wait until the last minute to remortgage or to switch to their lender's standard variable rate (SVR) temporarily. With 18 years remaining on their mortgage and a balance of £220,000, they seek advice on optimizing their remortgage strategy. Experts suggest that borrowers can start exploring new rates up to six months before their current deal expires. However, given the recent trend of falling rates, it may be prudent to begin shopping around three to four months prior to the end of the current mortgage term. Some lenders may waive early repayment charges (ERC) in the final three months, allowing borrowers to transition to a lower rate without penalties. For those looking to maintain flexibility, a tracker mortgage could be a viable option, as these typically offer lower rates than SVRs and can be switched without ERCs. This allows homeowners to secure a fixed rate later when they feel the timing is right. Additionally, if a borrower locks in a deal early and rates continue to drop, they may still have the opportunity to switch to a better rate before the remortgage is finalized. Finally, it is important to note that the loan-to-value (LTV) ratio plays a significant role in determining available rates, with the most competitive offers generally reserved for those with a 60 percent LTV or lower.