Demystifying remortgaging – how brokers can take the stress out of finding a new rate

Jonathan Stinton, head of intermediary relationships at Coventry for intermediaries, explores how brokers can support their clients to find the best possible mortgage product in today’s higher rate environment.

Approaching the end of your mortgage term can be daunting for many borrowers in today’s higher rate environment. While mortgage rates have gradually fallen from the spikes of last year, many homeowners will be considering the affordability of their future repayments on a higher rate than they currently have. 

With more than 1.5m homeowners due to reach the end of a fixed rate mortgage deal in 2024, brokers will be anticipating a busy period in assisting clients through the remortgaging and product transfer processes. But as many borrowers face up to switching onto a higher rate, there is an opportunity for brokers to ease any anxious feelings clients have and guide homeowners through their financial options.  Understanding borrower concerns 

In August 2024, the average rate for a five-year fixed mortgage is 4.86%. Although this rate has fallen over the past few months, and the beginnings of rate reductions with further easing is to be expected, the average rate for a five-year fix was just 2.74% in December 2019. 

An ongoing cost of living crisis adds to these financial pressures, straining household budgets and increasing anxiety about managing higher mortgage payments. In the UK, a concerning 7.4m people feel worried about paying their domestic bills and credit commitments. Couple this with looking for a new mortgage on a higher rate, and the picture becomes even more daunting. 

An expert voice

In an ever changing market fraught with challenges, brokers are essential in guiding their clients toward securing the best possible remortgaging deal. With access to a broad range of mortgage products and a deep understanding of current market trends, brokers should provide clients with a thorough overview of their options – including fixed, variable, or tracker rates – allowing borrowers to make well-informed decisions based on their unique financial circumstances.

By understanding a client’s financial situation, including their income, existing debt, and future goals, brokers can recommend the most appropriate mortgage product. Given that the remortgaging process can be overwhelming, brokers who offer clear explanations and simplify complex terms will provide steady support, boosting client confidence and making the process less intimidating for homeowners and buy-to-let investors.

The broker’s role in finding the best option 

When advising clients on their next mortgage deal, a critical element will be helping clients to understand the difference between a product transfer and remortgaging. 

Product transfers can offer favourable rates and are a simple solution for those looking for a new product. The need for a new affordability check is eliminated when using a product transfer, making the process far smoother than using a different lender. Homeowners concerned about the process will also be reassured that a product transfer is guaranteed with their current lender, subject to meeting applicable criteria.

However, in some cases, remortgaging may be the right choice for borrowers. For clients looking to consolidate debt, release equity or borrow more, remortgaging could be the go to option, though it requires a more comprehensive application process. Brokers are in the perfect position to weigh the pros and cons of each option for clients, ensuring that they choose the path to best align with their financial needs and goals.

As we anticipate a busy period of remortgaging activity, brokers will remain a fundamental source of knowledge, expertise and reassurance in supporting borrowers with finding the most suitable and affordable product. Brokers who stay updated on the latest products and trends are invaluable, and by offering personalised advice, they can foster closer client relationships and loyalty.

Article from The Financial Reporter by Jonathan Stinton | Coventry for intermediaries