2021 could be the year to remortgage on a fixed rate if your current deal is about to end. That’s because house prices have rocketed in the last 12 months meaning your loan-to-value (LTV) will have changed for the better. Consequently, lenders will be more likely to give you a better deal as a result of your property value going up. And fixing your rate now, with interest rates so low, means you’ll have some certainty about your financial outgoings for the next few years.

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Why remortgage?

Most of us shop around for the best phone contract or energy rates every year but we don’t pay as much attention to our mortgages. Sometimes it can be convenient to let your current provider send over its best offer, rolling over into a new contract seamlessly. But just like switching your car insurance, a new provider may offer a better deal.

Right now, people who are remortgaging are looking to take advantage of historically low-interest rates set by the Bank of England. Getting a fixed rate deal in 2021 could see you save money over the next few years if interest rates go up.

The benefits of a fixed-rate deal in 2021

With interest rates low, remortgaging now on a fixed-term deal for around 5 years will offer exceptionally good value. While there are no guarantees that interest rates will rise (they rose for the first time in years in 2017 and 2018 before dramatically reducing again in 2020), the likelihood is the Bank of England will eventually increase the base rate-making mortgages more expensive.

Do your research and compare different mortgage deals. In the UK, Trussle, for example, allows you to enter your latest property value against what you want to borrow. Its comparison tool then compares thousands of deals from 90 lenders enabling you to discover the best price. Helpfully it also allows you to categorise your search so you can quickly compare fixed rate deals, instantly seeing the cost of, for instance, a two-year fixed rate against a 10-year deal. 

Why fix your mortgage rate now and for how long?

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Fixing your mortgage rates gives you certainty around the amount of money you’ll be paying out each month. While a variable rate would historically allow you to take advantage of interest rate reductions, in 2021, with the Bank of England’s base rate so low, the assumption, backed by the experts, is that the only way now is up. The question is not “if” but “when” this will happen. Fixing your rate will give you peace of mind for the foreseeable future.

The best deals are to be found by those with lower LTV needs. Around 60% LTV would see some of the best offers allow you to take advantage of between 1.2% and 1.6% over two years and 1.6% to 1.9% over five years. As well as comparing the overall cost of your remortgage, it’s also worth considering other factors that may impact its value to you such as the follow-on rate, early repayment fee, and lender incentives.

The takeaway

With the Bank of England’s base rate historically low and house prices have dramatically risen in the UK, now is a good time to consider remortgaging on a fixed rate term. This means, in a period of economic volatility with house prices in flux, getting better value for your money over the next few years.