We’re currently in the midst of an all-out mortgage war.
If you believe the forecasters, we’re due for another year or so of the historically low base rate. This means that lenders are falling over themselves to get customers in through the door before it eventually goes up. As a result, there are some gobsmackingly good fixed-rate mortgage deals on offer.
“Fixed rates have fallen right back to hit new record lows, offering borrowers the opportunity to not only cut their monthly payments now but also to protect against rate rises in the future,” says David Hollingworth, spokesperson for Gocompare.com’s mortgage partner, London & Country.
So, if you have a standard variable rate (SVR) mortgage and haven’t reviewed your situation for a while, you could be in line to save thousands.
Consider this: a £150,000 repayment mortgage over 25 years would cost around £855 per month, at an SVR of 4.75%. If you were to cut the rate by switching to a fixed deal of 3%, it would mean that you’d then make a monthly payment of about £711. That equates to a whopping saving of around about £144 a month. If you were able to find a deal for 2%, it would give a monthly payment of around £636 – a saving of nearly £220 a month.
You could buy a lot of sherbet lemons with that.
A matter of equity
As is generally the case with remortgages, the more equity you have in your home, the better deals you’ll get.
Recently, Barclays launched a headline-grabbing 2.99% 10-year fixed rate deal. However, it’s only available to customers with a 40% deposit or equivalent equity in their home. There are also two-year fixed deals at super-low 1.5% interest rates.
That’s not to say homeowners with lower equity can’t get in on the fun too – you’d be amazed at what you might save.
Simply gather information on your outgoings (bills, council tax, student loan, roughly how much you spend on food and leisure and so forth) along with how much money you’ve got left to pay on your mortgage and request a call back from London & Country to get the ball rolling.
You could be on a better deal sooner than you think.
While there are a lot of tantalising low-rate mortgage deals on the market at the moment, be wary of the associated costs.
A low rate might not work out quite as cheaply as you’d originally thought when you factor in solicitor, surveyor and product fees.
High product fees are often a way for lenders to offer low rates profitably. Sure, that rate might look low, but will it work out quite as cost effective once a whopping great sum has been loaded on to the mortgage?
You might find a mortgage deal with a slightly higher rate, which will throw in solicitor and surveyor fees at no extra cost.
Thankfully, a broker can help you cut through the numbers and see the real overall cost of the deal.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.