Money Expert, Martin Lewis, has issued a warning to homeowners and advises paying a booking fee to secure the best mortgage deal now amid the cost of living crisis.
Returning to our screens, the finance expert calls the current situation a ‘ticking time bomb’ and said homeowners should:
“Prepare in advance and lock in a new cheap mortgage now to try and avoid higher interest rates“.
He went on to issue a stark warning to those who already have a mortgage after the cheapest rates more than doubled since October. Many homes have already been hit by the rising costs of electricity, food and petrol, with inflation at a four decade high of 9%.
The advice was to pay a booking fee perhaps even to lock in a cheap mortgage in case things get more expensive. And if it doesn’t, you can get a cheaper one elsewhere, working like an insurance policy.
When asked a question from a viewer about refinancing your mortgage deal when your current fixed term expires. Martin said:
“If you look at the impact on mortgages, six months ago, you could get mortgage deals below 1% mortgage fixes below 1%. The cheapest fixes are now double that at 2.1%. So the cost of getting a mortgage is going up”
A further concern as rates go up is the ability to actually be agreed for a mortgage. You need to pass a credit check and an affordability check. The affordability check examines if you are able to pay the mortgage.
With the cost of living rocketing and interest rates going up, potentially fewer people will be accepted because they will just be pushing themselves too far.
With many people already on fixed rates they may be expecting to fix again on a similar cheap rate, the problem is, it’s going to be a lot higher and potentially unaffordable as the cheapest fixed mortgage rates have more than doubled since October last year
Quite rightly, the advice was to speak to a mortgage broker to look at two or five-year deals:
“If things are going up and you want certainty, and you can get a cheap five-year deal, a five-year deal gives you certainty. I can’t promise it will have been the cheapest when you look back in hindsight. But if you want peace of mind in an uncertain world and boy, are we in an uncertain world, then fix and fix longer.”
Mortgage rates are expected to continue rising throughout the year, with some economists warning that the base rate could surpass 2% by the end of 2022.
Now we don’t want to add to any scaremongering, and thankfully buyers and sellers remain optimistic about finalising a mortgage deal, however, if you want to speak to an advisor to secure the best mortgage deal now, contact our associates at Your Mortgage Shop.