Are you paying more than you need for your mortgage? If you’ve had a mortgage for a few years, do you know even what your interest rate is? Once the initial mortgage deal is done, you tend to forget about it. The payment goes out of your account with alarming regularity. If you’re on your lender’s standard variable rate, there’s no doubt that you can save money by re-mortgaging.
There’s nothing complicated about arranging to re-mortgage your property. People are doing it all the time. Apart from the simple fact that you can save money by shopping around, there are other reasons for re-mortgaging too.
Someone whose family is growing may feel they ought to look for a bigger house. If the children are settled in local schools and rising house prices prevent a move within the area, they may consider improving their current home to provide more space and better facilities. A re-mortgage could provide the money to carry out these alterations.
Buy-to-let owners might be in the same situation as you. If they arranged their mortgage a few years ago, they’re probably paying much more than they need to. By re-mortgaging they may be able to carry out necessary repairs to the property or maybe some improvements, which would potentially improve the rental income. It may even be possible to increase their property portfolio, providing the deposit and legal fees for their next investment property.
Someone paying in the region of £540 a month for their mortgage could have that figure reduced to £353. This is because you can save 2.25% on the interest rate by switching from your lender’s SVR to one of the special discounted deals which are around at present.
There are lenders who will provide a re-mortgage package which is free of fees and who make no charge for valuing your property if you’re re-mortgaging. Amazingly some will also pay for standard legal work too.
Transferring your mortgage should take about 6 weeks from start to finish. Your current lender may charge a fee to release the deeds, typically around £300 and there could be a funds transfer fee of £25.
There are three basic types of mortgages. These are the traditional repayment mortgages and the newer interest only mortgages, plus another option – the flexible mortgage.
When it comes to interest, there is more choice available. A standard variable rate mortgage means that the rate of interest fluctuates according to economic pressures and just how much your lender values your business. Recent levels have been near their lowest for 50 years
With a fixed rate mortgage, the rate is fixed so that you know exactly what your repayment will be. Unfortunately with this type of mortgage there is normally an early repayment charge, so if you find a better mortgage at some time, it could be costly to get out of the current one.
Then there’s the capped-rate mortgage. This sets an upper limit which can be charged for a fixed period. If economic conditions are favourable, then the lender may reduce rate and therefore the monthly payments will fall. Because of the security that this offers, the interest rates tend to be a little higher on one of these deals.
For the best savings in the short term, discounted rate mortgages are the ones to look for. A reduction from the lenders variable rate is made for a fixed period of time. There may be a 2% offer, which means that if the lenders variable rate was, say, 6.5%, then as long as it remained at that, your mortgage interest rate would be at 4.5%. These rates are normally offered over two or three years. The interest rate is not fixed. If the lenders SVR increases, then so will your interest rate, but for the term of the agreement, it will remain 2% lower than the SVR. The early repayment charge may apply if you decide to move your mortgage elsewhere before the end of the agreed period.
Tracker mortgages, Cashback mortgages and Flexible mortgages are also available. There are plenty of products around and the re-mortgaging market is competitive at present. There’s never been a better time to make that move.
For more details on these products and some excellent advice, the easiest move is to find an on-line broker. They will have all the information at their fingertips and will search a wide range of companies to find a deal that’s right for you. There are some good on-line discounts available too.
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