New research shows that 75% of borrowers could be missing out on the opportunity to pay less for their mortgage. By not shopping around, three-quarters of homeowners could be paying, on average, nearly three thousand pounds more than is necessary over the lifetime of the loan.
The research by YouGov and a leading provider of mortgages also found that those with mortgages were twice as likely to change who supplies their energy rather than change their mortgage provider. Yet, changing their energy provider would only save homeowners £200 whereas changing their mortgage provider would save around £2,800.
A homeowner with a 25 year £150,000 mortgage who is sitting on their lender’s standard variable rate of 4.5% would pay approximately £833.75 per month. Yet by remortgaging to a fixed rate of say, 1.84%, the payments would fall to £624.16. That’s a saving of over £200 each month.
Apparently over half the mortgage holders in the UK have never switched providers to get a better deal. With historically low mortgage rates UK households are basically throwing thousands of pounds away each year.
I doubt people stay with their mortgage provider out of loyalty, I think the main reasons borrowers don’t change is that they don’t really know where to start and the whole process seems quite daunting. So here goes…
1. Find a Mortgage Adviser you trust – preferably one who is independent and able to look at the whole of the mortgage market for you.
2. They will check which lender will offer you the best rate for your circumstances, taking into account affordability, credit status, the value of your property etc.
3. Your broker will apply to the lender for your mortgage for you
4. The lender will carry out their various checks, (they may also want to come and value the house), and then they will issue your mortgage offer
5. From there the appointed solicitor will carry out the legal work to change the charge from your existing lender to your new lender
6. Finally, on the day of completion, your solicitor will request the funds from your new lender and pay off your existing loan. The new lender will write to you confirming when your first payment is due.
As an incentive, most lenders offer to pay for the valuation and the legal fees. This means that the whole process can sometimes be done for free and often for only a few hundred pounds which you can hopefully recoup via your new lower monthly payments.
New Year’s Resolution Number 1
Find out if you can save money on your mortgage!
For more information speak to a mortgage adviser on 01628 507477 or contact us.
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