Most mortgages come with special terms like a fixed rate or a discount off
the lenders' standard variable rate (SVR). Unfortunately, these terms do not
last for the duration of the mortgage and so the interest rate eventually
reverts to SVR.
Some lenders will offer another special deal but there is a good chance that
you will be able to improve on this if you shop around. For example, if you
had a £100,000 mortgage you would save £250 for every 0.25% that can be
shaved off the interest rate. It is not unusual to shave up to 2% off some
lenders' SVR's and significant savings can be made.
When looking for another lender you need to take into account any penalties
that you may have to pay to your existing lender. Penalties will be high if
you are still benefiting from a "special rate" and once you have come to the
end of this you may find that there is an administrative fee to pay - this
could range from £60 to £295.
The new lender will almost certainly charge a fee for a new deal, possibly a
survey fee too and there may be legal costs. Many lenders offer free legal
services and free surveys for re-mortgage customers. Expect to pay a lender
arrangement fee between £500 and £2000 depending on the size of your
mortgage and the type of mortgage rate you choose. These fees sound high but
they can easily be overcome from the savings you could make by reducing your
interest rate, particularly for larger loans.
A mortgage broker (like us) will be able to scour the market for the best
deal. They will take into account any setup fees and the rate of interest
charged to determine exactly how much the new mortgage will cost. A good
broker will compare this to your mortgage and be able to demonstrate exactly
how much you could save. By the way, we're a good broker! You may have to
pay the broker a fee too (not us unless you have unusual requirements).
Applying for a new mortgage is quite straightforward and in most cases is
carried out electronically without you having to visit the lender in person.
The whole application process takes about 4-6 weeks, most of this time is
used by the solicitor who will not start his work until a mortgage offer is
prepared.
When moving your mortgage it is also a good time to review your life
assurance income protection and Wills - our team of Independent Financial
Advisers will be able to help you with this if necessary.
When your new deal approaches the end of its special rate period we can
start the process all over again to ensure you maintain a competitive
mortgage.
