For most of us, our mortgage is the biggest financial commitment we have throughout our life. Given that it provides the security of a roof over our head, it is also one of the most important.
As the largest commitment, it is crucial that you get it right, and get the most competitive rate available for your circumstances.
Given the high capital value of a property, even a small change in interest rate can have a significant effect on the amount you pay on the mortgage.
For example a reduction in interest rate of 1½% on an interest only mortgage of £300,000 will lead to a saving of circa £375 every single month. That’s a whopping £4,500 each year. It’s a very significant sum.
The mortgage market is highly competitive. Provided you have completed the initial tie in period there are generally no penalties for moving lenders.
For this reason, more and more mortgage holders choose to switch their mortgage on a regular basis. Many lenders offer free valuation and free legal fees in order to attract the business.
It is estimated that around 60% of mortgage holders are currently paying “Standard Variable Rate” (SVR), which is the rate that all lenders will automatically move you onto once the tie in period has expired.
For many lenders it is not a competitive rate.
Don’t be limited just to what your lender has to offer. Mortgage rates change frequently and lenders will adjust the rates dependant on how much business they want.
If they have a lot of business in the pipeline they will often increase rates to allow them a chance to get caught up with the backlog of administration. Your research needs to cover what other lenders have on offer too.
An independent mortgage adviser would be able to do this research for you and also offer advice on what is the best option for your circumstances.
The mortgage market has changed significantly over recent years. If you are self employed, looking for a reasonably high mortgage in comparison to the value of your property, or looking for a large mortgage in relation to your income a mortgage adviser will be able to help you find an appropriate lender for you.
I no longer advise on mortgages bit would be very happy to introduce you to an excellent mortgage adviser if you need on. Just email me at Mary@mary-waring.co.uk and I will put you in touch.