The Yorkshire Building Society has highlighted that over £29 billion worth of residential mortgages in the UK are due to mature in October.
New analysis by the mutual; shows that thanks to increased house prices in many areas benefitting homeowners’ loan to value (LTV) ratios, those looking to remortgage this year could see their monthly repayments fall, or give those wanting to improve their property the option, without necessarily feeling the pinch.
For example, a homeowner in the North West who initially borrowed 90% LTV on a £250,000 property in 2019 could now benefit from a reduced LTV of 80% when remortgaging due to house prices in the region increasing on average by 13% over the last two-years.
Switching from an average fixed rate of 2.66% on a two-year deal at 90% LTV in 2019 to the Yorkshire’s current two-year fix of 1.85% for borrowers with 80% LTV could save almost £1,000 a year in repayments. Likewise, those who now have plans to improve their property after lockdown, could borrow more money to make their dreams a reality, and pay less than their current 90% LTV monthly repayments of £1,028.
In this situation a borrower could use the increased house value to add £10,000 to the mortgage and still benefit from an 80% LTV product. At the same rate of 1.85% it would mean monthly repayments of £991 over the remaining term of the mortgage, £37 a month less than their existing mortgage payment, with cash available for home improvements.
Ben Merritt, senior mortgage manager at Yorkshire Building Society, said: “With such a large proportion of mortgage deals maturing later this year it’s set to be a busy autumn as borrowers look to renew their home loans.
“Mortgages are likely to be one of the biggest financial commitments homeowners have, and undoubtedly some people will have found their circumstances or priorities have changed recently so the opportunity to remortgage may well be timely.
“With house price increases benefitting many parts of the country, borrowers could be pleasantly surprised with their new loan requirements. It could also be good news for homeowners who found themselves wanting to improve their home after spending so much time there in the last year. Raising additional funds as part of the remortgage to convert garages or landscape gardens may now be possible without much impact on the monthly mortgage payments they’re used to paying.”