The big story on the housing market this year – apart from soaring prices of course – has been the rise in interest rates. So, if you have been thinking about remortgaging, have you missed the boat?
In most cases, yes, you probably have, and this is certainly the case if you took out a mortgage in the past five years or so, when rates were similar or even lower.
A 100% mortgage fixed for 10 years will now cost you at least 3.2%, and that is double the rate we were seeing at the start of the year. Nevertheless, there are still some circumstances in which it might be worth remortgaging.
When you should remortgage in the Netherlands
If you currently pay a higher rate and you still have a few years to go before the fixed period runs out, it may still be cost effective to switch to a new mortgage before interest rates rise much more. After all, if your current rate is up for renewal in a couple of years, theoretically rates could be even higher by then. Are you not sure? Get in touch and we can help you do the sums.
You might also consider making the change if you are coming up to the age of 57 and want to fix your interest rate for a longer period or extend your mortgage. When you turn 57 banks want to know everything about your retirement income when deciding whether or not to give you a new loan – and when I say everything, I really do mean everything. So if you can avoid the third degree by doing it now, it makes sense.
It also still worth remortgaging if you want to release some of the capital tied up in your house to carry out renovations – something which more and more people have been doing since the number of homes on the market shrank.
If you have the financial flexibility and want more space, for example, now might be a good time to add an extension to your home, to give you a home office or a bigger kitchen. It could also be worth investing in increasing your home’s energy efficiency, by installing double glazing or even a hybrid heat pump, as the government is encouraging us to do.
In fact, the majority of new mortgages being taken out at the moment are remortgages to fund renovations or extensions.
You may also be thinking about buying a holiday home, and again, if you can afford it, then it might be smart to do so sooner rather than later. Many people have a lot of capital tied up in their property and it still makes financial sense to release some of it, if you have a major purchase in mind.
Of course, one of the problems of rising interest rates is that no-one has a clue what is going to happen. The war in Ukraine, EU fiscal strategy and soaring inflation will all have an impact on interest rate developments in the coming months. Economists think rates will continue to rise, but more slowly, but concrete forecasts are few and far between.
If you are a gambler, you can always wait and see what happens – and who knows, waiting a little longer could pay off. But in the main, unless you are paying a high rate of interest now, or want to remortgage with a specific purpose in mind, it is best to sit tight. You may have missed the boat this time, but another one will probably come along before too long.