Mortgage news
Are you on your lender's standard variable rate?
Mortgage Solutions comments on whether remortgaging would be right thing to do.
"In the past remortgaging was a sure-fire way to save money - and it was easy to make big savings. Today however, it is not so simple as most lenders have increased the fees and penalties they apply to customers who switch to a different provider.
As a result homeowners need to take more care when remortgaging and look out for the pitfalls. The good news is there could still be healthy savings to be made for those prepared to put in groundwork and seek out the best value deals. You may have to pay an early repayment charge to your existing lender if you remortgage.
Unless a borrower is already on a low rate mortgage deal or they are planning to clear their mortgage in the near future, looking at the option of remortgaging should be their number one resolution.
Borrowers paying their lender's standard variable rate should be considering the other options available to them; they could save money elsewhere as many lenders have already started to increase their SVRs. If your current lender will offer you a better deal it might be worthwhile but you should also compare this to the rest of the market before you make your choice.
Borrowers should resist the temptation to extend their mortgage term when they remortgage. If you do not begin to reduce the term of your loan you may still be paying the mortgage after you retire and this could be a considerable financial strain.
If you are able to afford it, try reducing the term of your mortgage. This way you will pay off your mortgage sooner at the current low rate and save money in the long term.
Top tips
- Read the small print. Check that your existing mortgage does not have an early repayment charge if you switch. These charges need to be taken into account when weighing up the advantages of remortgaging.
- Seek independent advice from a mortgage broker. The internet can be helpful for those who want to do their own research and seek out best buy deals but a broker can also save time and search out the most suitable rate for you.
- Speak to your existing lender. Speak to your lender and tell them that you are considering remortgaging and ask what deals it can offer. Some banks and building societies will offer good deals to get customers to stay rather than switching away. Retention mortgage products can be good value when the extra costs associated with remortgaging to another lender are taken into account.
- Fee-free deals may not be as attractive as they first seem. Often with fee-free mortgage offers the fees have simply been factored into the interest rate you pay, so over the term of the deal they may not work out any cheaper. Do your sums before you switch."
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