Posted by Malcolm Wallace | October 12, 2017
Why do I have to change lender to get a better mortgage rate?
You don't have to!
Read on - if you have a mortgage it WILL be worth it.
After advising on mortgages for the last fifteen years, I am at last seeing mortgage lenders start to make a real effort to help you stay on a competitive rate when your initial deal period ends and you move onto the Standard Variable Rate (the 'variable').
But my repayments have been really low for years. I don't need to bother.
The Bank of England is significantly talking up an increase in interest rates, so now is a great time to review your mortgage rate and see what choices you have. Especially if you're paying the 'variable' because there are potentially some fantastic mortgage details to be had at present.
Historically, lenders have not all tried particularly hard to keep existing borrowers on low rates. Some lenders have been better than others, warning you three months before the rate expired that you would swap to the 'variable' rate unless you did something about it.
So we all either became rate-hoppers with all the rate-hopping fuss or we put up with the variable and paid more than we need to.
Very few lenders allowed independent advisers like us to help you change your rate, you had to deal directly with the lender. That was OK for some of you, but many more would have wanted or needed some help in ensuring that you selected the product that is right for your individual circumstances: To fix or not to fix? How long should I take the new rate over? 2 years? 3 years? 5 years? Should I pay the lender an arrangement fee to secure a lower rate? Or no fee and pay a slightly higher rate? What if I want to pay some or all of the mortgage off? Can I reduce the term? What if I need to borrow more? These are just a few of the questions that may come up when reviewing a mortgage.
Remortgaging to a new lender is ok, the process is pretty slick, but it does involve submitting a new application, providing pay slips/accounts, bank statements etc, having a surveyor come out to value the property and using a conveyancing solicitor to oversee the change from one lender to another.
Ah, that's better…
Thankfully, the mortgage market seems to be changing. More and more lenders are now allowing financial advisers to help their existing customers take up a new rate when the current mortgage rate expires.
Why would I want that?
1. It's easier. It avoids an admin-heavy application process with a new lender.
2. It's quicker! It's often possible to move onto a new product the day after the existing rate comes to an end.
3. The rates are often competitive and there's a good range. We no longer have to put up with 'good enough'
4. Many lenders pay us to arrange your product switch and if they do, we won't charge you for our work. (The new rate you choose might have a product fee, so you might have to pay something, but not to us).
Not all lenders are offering this facility yet, but most of the major lenders are, even some of the late lenders have announced their intention to offer the facility in the near future. Soon those lenders who do not will be in the minority.
'Did you say 'interest rate rise'?
Yes, if you follow the stockmarket, you'll know that markets fell in September because Mark Carney said that an interest rate rise might happen in the next few months.
Get in touch if you would like us to review your mortgage rate and we will be happy to discuss the options with you!
Your home maybe repossessed if you do not keep up repayments on your mortgage