How to secure a mortgage rate and protect yourself from rising rates
Tags: Remortgages, Residential mortgages
Quick Summary
This article explains how borrowers can secure a mortgage rate to protect themselves from rising interest rates when buying a property or remortgaging. In the UK, lenders usually lock in the interest rate once a formal mortgage offer has been issued, which typically remains valid for three to six months, depending on the lender. This allows buyers time to complete the property purchase while keeping the agreed rate, even if mortgage rates increase during that period.
Homeowners can also secure a remortgage rate several months before their current deal ends, helping them avoid moving onto a lender’s higher standard variable rate. Applying early can provide certainty over future monthly payments and protect against market volatility. However, if mortgage rates fall after securing a deal, some lenders may allow borrowers to switch to a cheaper product before completion.
Overall, the article highlights that locking in a mortgage or remortgage rate early can provide valuable financial certainty, particularly when interest rates are unpredictable.
The war in the Middle East is starting to hit the money markets, and mortgage lenders are increasing the cost of their fixed rates.
As we have seen many times over the last few years, mortgage rates can change quickly, which is why many buyers and homeowners want to secure a mortgage rate early.
If you are purchasing a property, you may want to consider securing a rate with Nationwide Building Society, as its Decision in Principle (DIPs) last around 90 days. Once your mortgage is fully approved, the mortgage offer is typically valid for around 180 days (six months). During this time, your agreed mortgage interest rate is protected, even if market rates increase.
This is particularly useful when buying a property, as it gives you several months to complete the legal process without worrying about rate rises.
Securing a remortgage rate early
You can also secure a remortgage rate months in advance. Many lenders allow homeowners to apply for a new mortgage up to six months before their current deal ends.
This means you can lock in today’s rate while your existing fixed rate continues. If mortgage rates rise before your current deal expires, your new rate is already secured.
If rates fall after you’ve applied, some lenders may allow you to switch to a cheaper product before completion.
Aaron Strutt, product director at Trinity Financial, says: "Whether you’re buying a home or remortgaging, applying early can help you lock in a mortgage rate for up to six months, providing protection against potential interest rate increases.
"The cost of funding fixed-rate mortgages has jumped again, and it seems we are set to have a wave of rate increases this week. Even some of the lenders are warning that the changes are likely to be painful for borrowers, at least in the short term, which is quite unusual. It really seems like a good idea to secure a mortgage rate if you can, especially if you are buying somewhere soon or your remortgage is due over the next five or so months. The lenders tend to give very little notice when they make rate changes, so rates available today can disappear overnight."
Lending solutions with Trinity Financial
Are you looking to buy a property and require expert advice? We’re here to help you find a solution – no matter how complex your circumstances. Our expert brokers have extensive experience providing creative solutions to secure mortgages for our clients.
Call Trinity Financial on 020 7016 0790 to secure a more generous mortgage, book a consultation or use our appointment calendar
The information contained within was correct at the time of publication but is subject to change.
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