31st March 2020

Why remortgage right now – Covid-19 pandemic…

So with all the uncertainty and the crazy times we are living in due to the covid-19 pandemic a lot of you may question and wonder whether now is the time to look at your mortgage product, the base rate has changed, mass uncertainty world wide, whether that is for your residential house or your investment properties I would recommend you review your mortgages to see if you can save money and reduce costs as well as benefiting from the low interest rates.


So in March 2020 the Bank of England reduced their base rate down to a record all-time low, the lowest it has been in 325 years of the banking system and the base rate is now 0.1%!!! 


This means that the Bank of England lend money to other banks like Halifax Santander etc at 0.1% the banks then lend money to us the customers at a rate over and above this to make a profit but because the base rate is so low our interest rates we can access as customers on our mortgage products, should therefore be lower than ever or you would think and assume that would be the case.


So why not review yours? Considering we are all stuck in isolation and on lock down, we may not able to leave the house, you may not be able or allowed to work so you may as well do something with your time… why not take out your mortgage documentation and review it and speak to a broker


There are also quite a few important points on this note;


Just because the Bank of England base rate is lower this does not necessarily mean that you will be able to save money, some people are on very low interest rates already things like tracker mortgages from years ago, for those people you may be better off leaving things how they are, or you may also be In a fixed rate period which means if you change your product now they may be early repayment charges. However, If the saving in interest rate means that you will save a lot of money over the rest of the term of your mortgage, it may still be worth changing early and taking a hit on the early repayment charges as you may still will work out better off throughout the rest of your mortgage. A good broker will work this out for you and id also say do your own maths on it after speaking with a broker just to double check.


On the flip side of this, Unfortunately a lot of people are going to financially struggle during this period, self-employed people, as I write this, have been told they will get minimal income and things like statutory sick pay has been discussed for them, employed workers are getting 80% of their wages people are being laid off, paid off, contracts terminated along with serious health issues around the world, it is unprecedented and crazy times we are experiencing. What I fear will happen next is that a lot of Families will get into a lot of debt due to lack of income and may not be able to get out of this debt for many many years to come!


One way to access money reasonably cheaply is to release money from a property that has equity in it, with Banks going up to 90% and sometimes even 95% loan to value when you capital raise, you may be able to release money from your property, although I must point out you must check the banks criteria as many may not allow you to release money just to live off however releasing money for debt consolidation is fine for a lot of banks again always discuss this with the broker to clarify your situation and plan the best way forward.

(Debt consolidation means you release money from your mortgage to then pay off debt which will mean you are better off as a whole each month)


If you have credit card debt, personal loans, payday loans and any other high interest lending facilities, they typically have much higher interest rates than  a mortgage would, therefore a way to reduce your overall monthly expenditure would be to release money from your residential property to consolidate debts and then as a house hold you will be better off each month. Very important in the current economic climate, yes you will be paying interest on the amount you release over the remaining term of your mortgage so long term you may be paying out more in interest so consider this before committing to anything, however it can still reduce your monthly outgoings considerably in these unprecedented, worrying, crazy times which may be needed for some of you reading this for sure.


Your maybe one of the lucky ones, you may not need to ramp up your credit card balances and use loans and things to get by in these worrying times. You may just be sitting on a high interest rate or a variable rate therefore a way to reduce your monthly expenditure will be to review your mortgage product to see if you can get a better interest rate elsewhere therefore lowering your monthly payments. I would again recommend speaking to a broker like we Bespoke Financial Newcastle ltd whose details are below as they specialise in re-mortgaging. They have a re-mortgage team open seven days per week 8am until 8 pm so if you want a free no obligation chat to see if you can save some money and simply give them a call and they will help you. After all it costs nothing to find out and you only have something to gain, nothing to lose.


If you have buy-to-lets and investment properties, it is also worth speaking to a broker to review your portfolio and the products you have to again see if you can save money each month therefore making you more profit each month. Especially with the government basically telling tenants they may not need to pay their rent.


Mortgage holidays 


Mortgage holidays have always been available through the majority of banks, this is where the lender will give you the customer a break from paying your mortgage payments if you came into financial difficulty this is normally and previously been down to the banks discretion however now the government has came in and stated that people should/may be able to get this, although, nothing is ever guaranteed, especially with banks and the government, I would recommend speaking to your current mortgage lender as soon as physically possible to discuss your situation, your current financial position to see and understand the process. A word of caution, please please please check with your bank that if you do take them up on a mortgage holiday that this will not affect your credit rating, if it does affect your credit rating and is recorded on your credit file as a late payment or a default, this will negatively impact your ability to take out a new mortgage and re-mortgage in the future and also may mean that you cannot re-mortgage with certain banks or get the better products that certain banks offer due to this, so please double check and confirm this with your bank before committing to doing a mortgage holiday. Also consider that when you do a mortgage holiday the bank still adds this money onto the back of the mortgage you do still have to pay it so onoly use the option if you really need to.


I have heard of friends and clients in the past doing this, well before Corona and covid 19, taking Mortgage holidays with their banks and it then annoyingly put them in a position where they are unable to re-mortgage with certain banks when their fixed rate ended and they had to take a product with a much higher interest rate. That being said, if it is your only option then you still have to do it.


Some useful numbers for some of the banks we use a lot if you need to call them about mortgage holidays;


Nationwide – 03457302011
Bank of Ireland – 0800 169 9722
BM Solutions – 0345 850 5000
HSBC – 03458500633
Santander – 08007839738
Leeds Building Society – 0113 225 7972
Halifax – 0345 850 3705
Barclays – 0800 022 4022
Virgin Money – 03456028301
Natwest – 0800 400 9999

Please check with each bank around there own criteria for mortgage holidays and their terms and conditions


This free report was based on my industry knowledge of over 10 years in this industry I am very passionate about what I do and I love helping families arrange the correct mortgages for them as well as the associated insurance products. These are my own views and based on what I deem to be correct information as I write this, please be aware things may change and maybe different from what I have talked about above in the future if you would like some advice or guidance I am happy to help. I would recommend speaking to a broker as everyone’s situation is different and specific to them. Please get in touch with me on the numbers below and I will explain in full all relevant information teas and sees and product details so you can make an informed decision to go ahead


Our office number is (0191) 580 7177


Our website is www.bespokefinancialnewcastle.co.uk


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I hope you enjoyed this free guide on why you should remortgage now, please watch out for future guides on other services we offer that may help you


Thank you very much for reading I appreciate it massively I hope you and your family stay safe