Iona Bain: Hello, I'm Iona Bain and welcome to A Little Bit Richer,
Iona Bain: brought to you by Legal & General. Now, if your current
Iona Bain: mortgage deal is coming to an end or you're thinking
Iona Bain: about switching things up, well, you're in luck because today
Iona Bain: we're talking all about remortgaging. If you're worried about affordability,
Iona Bain: thinking of fixing your rate or wondering how your current
Iona Bain: life stage affects your options, we've got you covered. I'm
Iona Bain: thrilled to welcome back friend of the show, Sarah Tucker,
Iona Bain: better known as The Mortgage Mum. As a qualified advisor,
Iona Bain: podcast host and trusted voice in the mortgage space, Sarah
Iona Bain: has helped thousands of people feel more informed and empowered
Iona Bain: about their financial decisions, whether they're buying their first home,
Iona Bain: remortgaging or planning for the future. Sarah, welcome back. It's
Iona Bain: great to have you with us.
Sarah Tucker: Thank you. Thank you for having me. I'm excited.
Iona Bain: So can you briefly explain what remortgaging is, and why
Iona Bain: and when people do it?
Sarah Tucker: Mm- hmm. Yes, so remortgaging is simply when you are
Sarah Tucker: switching your mortgage deals. Gone are the days where you
Sarah Tucker: get a mortgage for 30 years and you just stay with
Sarah Tucker: the same bank until the end of your mortgage term.
Sarah Tucker: You will generally have got a fixed rate or perhaps
Sarah Tucker: a tracker rate, and that product will have an end
Sarah Tucker: date, whether that's two years, five years, 10 years. And
Sarah Tucker: remortgaging is when you're coming up to the end of
Sarah Tucker: that date, we are going to put you onto a
Sarah Tucker: new deal.
Iona Bain: And remortgaging has become particularly important in the last few years.
Sarah Tucker: Yes.
Iona Bain: Can you tell us why?
Sarah Tucker: Remortgaging has been difficult for a lot of people in the
Sarah Tucker: last few years. So taking you right back to COVID,
Sarah Tucker: the interest rates were extremely low. We call them COVID
Sarah Tucker: cheap rates in the industry, and people fixed those for
Sarah Tucker: two years or five years. And in 2022, we saw
Sarah Tucker: a huge increase in the swap rates after Liz Truss
Sarah Tucker: made an announcement, which is quite infamous in our industry
Sarah Tucker: now as a pivotal moment where we saw rates increase
Sarah Tucker: dramatically. They have come down quite a bit since then,
Sarah Tucker: but they're still a lot higher than they were in
Sarah Tucker: the COVID cheap times. We are creeping towards our new
Sarah Tucker: normal in the rate market, and so in terms of
Sarah Tucker: a remortgage, it's about timing. Some people had incredibly difficult
Sarah Tucker: timing where the rates were very, very high and they
Sarah Tucker: were coming off those cheapest rates. But the good news
Sarah Tucker: is anyone that's looking for a remortgage now, or in
Sarah Tucker: the next year or two, should not have as much
Sarah Tucker: of a shock, and may even have a decrease in
Sarah Tucker: their rate if they're someone that remortgaged two years ago
Sarah Tucker: when things were very difficult and may be coming off
Sarah Tucker: of those very high rates onto a slightly better one.
Sarah Tucker: So we've got all sorts of scenarios on our desks
Sarah Tucker: at the moment.
Iona Bain: Mm. So if people have already had to do that painful
Iona Bain: remortgage in recent times, there may be slightly better news
Iona Bain: ahead for them. Let's wait and see.
Sarah Tucker: Yes.
Iona Bain: To fix or not to fix? That is the question.
Iona Bain: I think fixed rate mortgages have become really, really popular,
Iona Bain: but there is an alternative which is to track the base
Iona Bain: rate instead. Can you talk us through the pros and
Iona Bain: cons of each option?
Sarah Tucker: Absolutely. So the fixed rate market, you're right, has become
Sarah Tucker: much more popular, and I believe that's because people craving
Sarah Tucker: control and certainty. So with a fixed rate, you are buying
Sarah Tucker: a rate for a period of time and you have
Sarah Tucker: complete certainty as to what you're paying. You know exactly
Sarah Tucker: where you stand with that rate every month until the
Sarah Tucker: end of that product. The downside of a fixed rate is
Sarah Tucker: that there's no flexibility or little flexibility. So if you
Sarah Tucker: want to move house or you want to sell the
Sarah Tucker: property, you are going to pay an early repayment charge
Sarah Tucker: unless you take the mortgage with you. The tracker rate
Sarah Tucker: environment is becoming more popular now because we're hearing reports
Sarah Tucker: of the Bank of England base rate reducing. They've reduced
Sarah Tucker: it a few times already this year, and investors think
Sarah Tucker: that they will do it more than 2025. So those people
Sarah Tucker: on a tracker rate immediately benefit because their rate tracks the
Sarah Tucker: Bank of England base rate. So if it goes up,
Sarah Tucker: it goes up, and if it comes down, it comes
Sarah Tucker: down with it. The great thing with the tracker rate is
Sarah Tucker: it's flexible. So just to put it in perspective for
Sarah Tucker: myself, I've come up from my remortgage and I thought, "
Sarah Tucker: I think I'm going to move in the next two
Sarah Tucker: years. I don't know when, but I think I'm going to."
Sarah Tucker: So I've done a tracker rate mortgage and I also
Sarah Tucker: feel confident in the market, so I am happy to
Sarah Tucker: take that risk, but there are people out there that
Sarah Tucker: wouldn't be happy to risk the fact that their monthly
Sarah Tucker: payment could go up as well as down. But for
Sarah Tucker: me, because of my moving situation, it makes sense. For
Sarah Tucker: anyone trying to decide to fix or not to fix,
Sarah Tucker: I would be looking to ask them some questions such
Sarah Tucker: as, do you think you'll move in the next few
Sarah Tucker: years? Is there any big changes ahead that perhaps a
Sarah Tucker: fixed rate might limit you in flexibility- wise? What is
Sarah Tucker: your attitude to risk? Let's talk about how much room
Sarah Tucker: you've got, wiggle room, in terms of your monthly payment
Sarah Tucker: and how you'd feel if the rate went up a
Sarah Tucker: little bit or down. So it's all about talking to
Sarah Tucker: people about the life around the mortgage and that's how
Sarah Tucker: we decide if it's fix or not to fix.
Iona Bain: That's really interesting because a tracker mortgage, it sounds like
Iona Bain: that can potentially help you keep your options open.
Sarah Tucker: Yes.
Iona Bain: So if you are looking to move or there is
Iona Bain: a change in your situation, that there aren't going to
Iona Bain: be extra fees involved with having to change your mortgage
Iona Bain: as opposed to with a fixed rate mortgage.
Sarah Tucker: Absolutely. We have to start with you. What's happening in
Sarah Tucker: your world? Then we look at what's happening in the
Sarah Tucker: economic world.
Iona Bain: That is always a good idea.
Sarah Tucker: Yes.
Iona Bain: Start with your own situation.
Sarah Tucker: Start with you first.
Iona Bain: (inaudible) good idea. How might a change in your
Iona Bain: own situation affect you if you're remortgaging?
Sarah Tucker: Good question. I think a lot of people have this
Sarah Tucker: if they've had a change of job or perhaps if you've
Sarah Tucker: had a baby in the last two years or five
Sarah Tucker: years, a lot can happen. When you fix a rate,
Sarah Tucker: it's a really weird feeling because you don't know what's going
Sarah Tucker: to happen in the next two years or five years,
Sarah Tucker: but what you are doing is saying, " I will live
Sarah Tucker: here, and I will pay this mortgage, and I will
Sarah Tucker: not leave for that period of time." And relationships break
Sarah Tucker: down, all sorts of things can happen. Well, I'll touch
Sarah Tucker: on the childcare one, if you have a baby, because
Sarah Tucker: that's an easy answer. You can still remortgage if you're
Sarah Tucker: on maternity leave, if you've had a child. If you've
Sarah Tucker: had a change in income, we're going to obviously look
Sarah Tucker: at your application fresh and we'll say, " What are you earning
Sarah Tucker: now? What's your situation now?" We'll look at your mortgage
Sarah Tucker: affordability and you have two choices always. One is to
Sarah Tucker: remortgage away from your lender, and the other is to
Sarah Tucker: stay with your lender and just switch the product. Switching
Sarah Tucker: your product has a lot less underwriting and a lot
Sarah Tucker: less of a process. So some people opt for that
Sarah Tucker: for ease, but it's good to check the rest of
Sarah Tucker: the market to make sure that you're with the best
Sarah Tucker: lender. But certainly if you've had a big life change,
Sarah Tucker: I think it's just reassuring for people to know they
Sarah Tucker: can stick with their current lender if they don't want
Sarah Tucker: to go through the underwriting and perhaps feel a bit
Sarah Tucker: anxious about doing so. Any change in your income obviously
Sarah Tucker: will affect your ability to pay your mortgage potentially, hopefully
Sarah Tucker: for the better. For most people it's for the better.
Sarah Tucker: But I think for people worrying, what we see is
Sarah Tucker: a lot of people don't ring their bank. They don't
Sarah Tucker: switch the rate. They go onto what's called a standard
Sarah Tucker: variable rate. They pay a lot more money and they
Sarah Tucker: don't talk to us because they're worried. What if I talk
Sarah Tucker: to an advisor, and then they tell me I can't
Sarah Tucker: have my mortgage and they take my house away? That
Sarah Tucker: is not going to happen. So my biggest message is,
Sarah Tucker: go and speak to... Hopefully the advisor you used in
Sarah Tucker: the first place is the one to contact you six
Sarah Tucker: months before your rate ends, and just tell them what's
Sarah Tucker: going on right now for you, what's happened in the
Sarah Tucker: last few years and let them guide you through.
Iona Bain: Yeah, because the standard variable rate is not going to be
Iona Bain: a good deal for you.
Sarah Tucker: It's not. It's the highest option out of the three and
Sarah Tucker: you can be talking about hundreds of pounds a month
Sarah Tucker: more. And so many people are on it.
Iona Bain: That's crazy.
Sarah Tucker: This is what's crazy, 1. 8 million people coming off
Sarah Tucker: of their fixed rate deals and I'm... There will be
Sarah Tucker: a huge number that do nothing. And that is a
Sarah Tucker: mission for us to try and get through to those
Sarah Tucker: people and say, " Don't do nothing because then you're just
Sarah Tucker: going to switch onto the variable rate."
Iona Bain: Yeah, because it's crazy, but it's a very, very understandable
Iona Bain: mistake to make whereby you just think, " Hang on a
Iona Bain: second, I've really got no choice but to do this."
Iona Bain: Whereas you're making it clear, no, it doesn't have to
Iona Bain: be like that.
Sarah Tucker: Yeah, and I think if you just, as somebody that perhaps
Sarah Tucker: isn't engaged in mortgages, probably-
Iona Bain: (inaudible) .
Sarah Tucker: ... don't read mortgage information for fun like me, and
Sarah Tucker: maybe just have heard in the press, mortgage rates have
Sarah Tucker: gone up and you don't really understand. You might just
Sarah Tucker: look at your bank statement and go, " Oh, yeah, it's
Sarah Tucker: nightmare. My mortgage has gone up by 500 pounds. What
Sarah Tucker: a terrible market we're in," and not realize, that's not
Sarah Tucker: the norm. Yes, the rates have gone up, but you
Sarah Tucker: don't just need to sit and let it fall onto your
Sarah Tucker: rate, and there's no judgment if you do. Just pick
Sarah Tucker: up the phone, decide today that you're going to change
Sarah Tucker: that and look into it.
Iona Bain: That's a very good point. Even if you are on
Iona Bain: a standard variable rate, you can end that today.
Sarah Tucker: Yeah.
Iona Bain: It's not too late.
Sarah Tucker: Yeah, exactly, and save yourself immediate money, hopefully.
Iona Bain: That's a great shout. How far in advance should people
Iona Bain: be thinking about remortgaging?
Sarah Tucker: Okay, so it used to be three months before, but
Sarah Tucker: we now say six months before. And the reason we say
Sarah Tucker: that is the rate market has moved around quite a
Sarah Tucker: bit and we are still seeing it move now. So
Sarah Tucker: there's fluctuation and that's because of things like Trump and
Sarah Tucker: his tariffs, and world news. All of these things affect
Sarah Tucker: the confidence in the market and that affects the interest
Sarah Tucker: rates. So if you look at it six months before,
Sarah Tucker: the benefit of that is, you know your worst case
Sarah Tucker: scenario. You know you're sorted. You know it's organized, and
Sarah Tucker: then it's up to your advisor to just check the
Sarah Tucker: rate movements for you. And we have great tech in
Sarah Tucker: the background that does it to help us, that will
Sarah Tucker: constantly check our pipeline of clients to make sure they've
Sarah Tucker: got the best rate because the rates are always moving.
Sarah Tucker: So six months before is going to give you time
Sarah Tucker: to do that. It does take people a while to
Sarah Tucker: get their paperwork together. We're busy. We're busy people. Getting
Sarah Tucker: your payslips and your bank statements together, it's a pain
Sarah Tucker: for people, but it's well worth doing. It's like that
Sarah Tucker: annoying job you keep putting off. Once you get started,
Sarah Tucker: downloading your PDFs, logging into your bank accounts, it's not
Sarah Tucker: as bad as it seems and you do feel really
Sarah Tucker: empowered, because I think a remortgage is a really good
Sarah Tucker: little life review, to be honest. How's it going? How's
Sarah Tucker: your budgeting going? Have you got any savings? Can we
Sarah Tucker: shorten the term a bit? Could we pay a little
Sarah Tucker: bit more off a month? It's a really great time
Sarah Tucker: to go, "How are we... Yeah, we've (inaudible) property."
Iona Bain: (inaudible) for your finances.
Sarah Tucker: Exactly.
Iona Bain: Yeah.
Sarah Tucker: So lean into the process and you'll get something good
Sarah Tucker: out of it.
Iona Bain: Yeah. Circle that date in your calendar, six months before
Iona Bain: your deal's coming up for renewal. Great tip. Also, are
Iona Bain: people maybe remortgaging so they can improve their home rather
Iona Bain: than move?
Sarah Tucker: We are seeing this a lot as well. Yes, and
Sarah Tucker: the reason why I think is the stamp duty increase
Sarah Tucker: has made a difference in people budgeting for moving and
Sarah Tucker: being a bit more creative with the space that they
Sarah Tucker: have. I don't know what it's like in your area,
Sarah Tucker: but I can't walk down one road without seeing so
Sarah Tucker: many builders everywhere. I don't know enough about the build
Sarah Tucker: industry to know if prices have come down. I know
Sarah Tucker: they went up hugely for people doing extensions, but we
Sarah Tucker: are seeing a lot more people, yes, remortgaging to improve
Sarah Tucker: their home or even to consolidate debts. Just being a
Sarah Tucker: bit more creative with the remortgage process, looking at it
Sarah Tucker: as a financial review and seeing what opportunities there might
Sarah Tucker: be in that process.
Iona Bain: Are people still dreaming about being able to pay off
Iona Bain: their mortgage even if for many it's a pipe dream?
Iona Bain: And are some people overpaying their mortgage, say when they
Iona Bain: get a lump sum?
Sarah Tucker: Yeah.
Iona Bain: And if that's the case, then what are the things
Iona Bain: that people need to be aware of if they are
Iona Bain: still looking to pay down their mortgage as quickly as
Iona Bain: they can?
Sarah Tucker: There's definitely a rise in creators online who are creatively
Sarah Tucker: showing people how they're paying off their mortgage, even if
Sarah Tucker: they're 20 years away. And there is a whole market
Sarah Tucker: out there who's really interested in that. I think again,
Sarah Tucker: if you come back to the psychology, people just want
Sarah Tucker: to feel secure, but not everybody. There is, I would
Sarah Tucker: say, a complete split between people who are like, " Ugh,
Sarah Tucker: paying your mortgage off, whatever. It doesn't matter. As long
Sarah Tucker: as I can afford it, I want to keep growing,
Sarah Tucker: getting a bigger property or being aspirational." And there are other people that are like, "
Sarah Tucker: I just want to feel secure. I want to know
Sarah Tucker: this is mine. I don't want someone to be able
Sarah Tucker: to take it away from me." For those people, I
Sarah Tucker: think if you're making overpayments, just make sure you're keeping
Sarah Tucker: within the realms of possibility for your mortgage. So some
Sarah Tucker: lenders let you make unlimited overpayments, some don't. Some say, "
Sarah Tucker: 10%, then you'll get charged." How dare you for paying
Sarah Tucker: off your mortgage? And if you do come into a
Sarah Tucker: windfall of money and you want to pay off your
Sarah Tucker: mortgage, your early repayment charge will still apply. So you think, "
Sarah Tucker: I'll win the lottery. I'll pay my mortgage off." Well,
Sarah Tucker: you might want to wait until the end of your
Sarah Tucker: early repayment charge. You might not care. It depends how
Sarah Tucker: much you win. But it's just a personal decision always.
Sarah Tucker: Obviously, paying off your mortgage is our job to try
Sarah Tucker: and get people to do that, work towards that day
Sarah Tucker: where you're mortgage free, whatever that means for you. But
Sarah Tucker: speaking really openly, I think there are other ways to
Sarah Tucker: use your money as well, and I'm not an investor
Sarah Tucker: and I'm not promoting investment products, but you can invest
Sarah Tucker: your money in stocks and shares ISA, and that might
Sarah Tucker: grow better than saving on your mortgage rate. And we're seeing
Sarah Tucker: a bit more of that as well. Bit more of
Sarah Tucker: that entrepreneurial mindset when it comes to movement of money,
Sarah Tucker: buying further properties, thinking about retirement differently. It's not just
Sarah Tucker: about adding to your pension anymore. People are like, " How
Sarah Tucker: can I retire differently and what does that need to
Sarah Tucker: look like?" And of course, pensions are important. I really
Sarah Tucker: encourage people to really educate themselves in their own scenarios.
Sarah Tucker: I've done it myself where I say, " I want this
Sarah Tucker: much month to month when I retire. I'm retiring at
Sarah Tucker: this age. What would I need to put into my
Sarah Tucker: pension pot? I'm 40 years old." And it's great because
Sarah Tucker: it gives you a bit of a frame of reference.
Sarah Tucker: Obviously a financial advisor will do that even better. So
Sarah Tucker: it's about thinking about your own personal goals and it's
Sarah Tucker: all too easy. I was someone that just like, oh,
Sarah Tucker: yeah, pension, oh, retiring, paying off your mortgage, it's years
Sarah Tucker: away. It's so many years away, but the years go
Sarah Tucker: quickly and it's really important to think ahead, and it's
Sarah Tucker: actually empowering in its own way and exciting in its
Sarah Tucker: own way.
Iona Bain: And on the flip side, there will be people who
Iona Bain: will not be able to overpay their mortgage. In fact,
Iona Bain: what they'll need to do is extend their mortgage. What
Iona Bain: advice do you give people who might be looking for
Iona Bain: ways to make their mortgage more affordable over the long term?
Sarah Tucker: You're going to not be surprised to hear that I
Sarah Tucker: say, definitely speak to somebody because that anxiety can take
Sarah Tucker: such a hold over you, especially when it comes to
Sarah Tucker: money. And we've held a lot of people through those
Sarah Tucker: really horrible conversations of realizing they've got to find X
Sarah Tucker: amount more a month for a mortgage that they don't
Sarah Tucker: often think about. They don't get anything extra for that
Sarah Tucker: money. They're not releasing equity for that money. They're just
Sarah Tucker: paying more for the same borrowing. For people to just
Sarah Tucker: lose hundreds of pounds a month, it's not nice. And
Sarah Tucker: for some people, whilst on paper they can afford it,
Sarah Tucker: that creates a huge amount of stress and anxiety because
Sarah Tucker: we all tend to live within our means and we
Sarah Tucker: get used to the money we have. So our job
Sarah Tucker: has been and continues to be looking at that monthly
Sarah Tucker: budget with someone, with a third party perspective and saying, "
Sarah Tucker: Okay, you've got seven subscriptions. Is there any of those
Sarah Tucker: we can let go of? Have you reviewed your energy
Sarah Tucker: bills? Have you spoken to other providers?" Some people, they
Sarah Tucker: are used to having a car, for example, or a
Sarah Tucker: second car. And it is challenging to challenge people on
Sarah Tucker: what their normal is in a really kind but affirmative
Sarah Tucker: way because ultimately we're just trying to show them that
Sarah Tucker: there are tweaks that can make, and you can often
Sarah Tucker: make a percentage change on your budgeting if somebody just
Sarah Tucker: has a look at it with you and says, " Could
Sarah Tucker: we do this?" Now, practically, if we've done that and
Sarah Tucker: we've exhausted all the options there, and you're still saying
Sarah Tucker: to me, " I'm worried about this, I can't do it."
Sarah Tucker: We can look at your mortgage term and we can
Sarah Tucker: extend it. So just as people shorten it, people do
Sarah Tucker: extend it, if they're on maternity leave, or they've got
Sarah Tucker: reduced income, or they've been poorly, or just simply that
Sarah Tucker: they don't feel comfortable with the new rate. As long as
Sarah Tucker: we're talking about, okay, well, by adding that time on
Sarah Tucker: you're going to pay more over the long run, and
Sarah Tucker: we've explained all of that, it's our job to keep
Sarah Tucker: reviewing that. The idea is that, again, in five years,
Sarah Tucker: maybe when the children are older or they're in a
Sarah Tucker: different position, we can reduce the term again. So it's
Sarah Tucker: our job to really flex and bend with our clients.
Sarah Tucker: Yeah, I would say if you are someone, and probably
Sarah Tucker: you're in the majority, less people worrying about how can
Sarah Tucker: I pay my mortgage off, more people are worrying about
Sarah Tucker: the interest rates increasing, then just make sure you're getting
Sarah Tucker: the right advice.
Iona Bain: Yeah. So make sure you get yourself a new deal
Iona Bain: that works for you.
Sarah Tucker: Absolutely.
Iona Bain: So finally, Sarah, have you got three top tips for
Iona Bain: folks who are locking in a new mortgage deal?
Sarah Tucker: Leave yourself plenty of time. Speak to someone six months
Sarah Tucker: before, as I've said all the way through. So leave
Sarah Tucker: yourself plenty of time because it is another admin task
Sarah Tucker: and I want you to think into it. So the
Sarah Tucker: more time you have to do that, the better. Be open-
Sarah Tucker: minded about solutions that you might not have thought of
Sarah Tucker: or little tweaks to your monthly budgeting that might really
Sarah Tucker: help. And as always, use an advisor. Use someone that
Sarah Tucker: you trust to have an open conversation with, and if
Sarah Tucker: you are worried about something, say it. It is just as
Sarah Tucker: much an emotional advice service as anything else. So just
Sarah Tucker: make sure you feel comfortable enough to say that to
Sarah Tucker: the person that's dealing with your remortgage. And the other
Sarah Tucker: tip, I would say, is don't just go to your
Sarah Tucker: bank or building society. Don't be tempted to just switch
Sarah Tucker: your rate. Look at what else is on the market
Sarah Tucker: because you might be surprised at how different it could be.
Iona Bain: Play the field. Why not?
Sarah Tucker: Yeah, play the field.
Iona Bain: Thank you so much.
Sarah Tucker: Thank you.
Iona Bain: Sarah, it's just really great to know that we've got
Iona Bain: so many options at our fingertips. So thank you for
Iona Bain: guiding us through all that. I would love it if
Iona Bain: you could follow the podcast, leave us a review and
Iona Bain: help others get a little bit richer too. This podcast
Iona Bain: is brought to you by L& G. You can keep
Iona Bain: up with the show on YouTube, TikTok and Instagram, @ legalandgeneral. Until next time, happy
Iona Bain: house hunting and see you soon.