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It’s estimated that millions of homeowners are wasting as much as £5,000 – a year – in mortgage interest payments, simply by failing to switch to a cheaper mortgage deal. Many of these borrowers say that the difficulties they encountered when they obtained the initial loan (lending criteria is pretty stringent these days) , has really put them off looking at other mortgage options.
Many took out either a good (at the time) fixed rate, a tracker rate or a discounted deal but, when these came to an end, they failed to look at their options, in some cases it down to apathy and in others, to fear of a prolonged, intense, ‘vetting’ procedure.
What does this mean
It means that, as their initial deal has ended, they are now on the lenders variable rate, which is almost always far higher. The online mortgage broker, Trussle, carried out some recent research and discovered that just one in three borrowers have switched mortgage loan, which could save them substantial amounts of money. Trussle say that around two million borrowers are paying thousands of pounds more than they need to every year. In some cases they are paying £408 PER MONTH more than they need to.
What’s the difference in rates?
The average standard variable rate (SVR) is around 4.8%, whilst there are two-year fixed rates currently as low as 1% – a huge difference. On the average £131,000 mortgage, this amounts to paying £4,920 A YEAR more (double that figure for a £260k mortgage).
The more equity you have in your property, the more mortgage options that are open to you. The really good deals normally start where you have 20% equity, if you have 40% equity in your property you get an even better deal from some of the major lenders. Even having 5-10% equity should offer better mortgage deals than a lender’s variable rate. Lenders have to look at affordability, now and when whichever rate ends, and also your credit history and overall eligibility.
It’s not that difficult
Most of the remortgage deals currently available, from a wide range of lenders, will offer Fee-Free remortgages, they will pay your legal and survey costs and they offer the option of having no Arrangement Fee, some even offer Cashback on completion.
Best Advice on Remortgaging
Here at Star Mortgages, the mortgage team we work with from ESPC Mortgages, in every remortgage instance, recommend that the borrower first speak to their current lender to see what they may be offered. The reason for this is that a lender, wanting to retain the business, may pull all the stops out to give you a good deal (Nationwide, for instance, allow existing borrowers to switch mortgages without new affordability checks as long as they are not increasing the amount borrowed). Also, they know your financial/mortgage history, allowing the transaction to move along a little more quickly.
For more, no-obligation, information, please email or call:
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