“It’s time to sort out the mortgage…”
At this time of year many people are still looking at ways to save money having endured some heavy spending over the past couple of months. It therefore makes good sense to review what is usually people’s biggest monthly expense. Reviewing your mortgage on a regular basis does often have worthwhile benefits – but if you are thinking of moving to a different lender, you also need to be aware of the potential costs involved.
The main reason most people want to move their mortgage is to enjoy lower monthly repayments, which is not surprising in the current economic climate. But as well as lower rates, there are other equally valid reasons why it might make sense to look at changing lenders.
Here are some reasons why you may want to consider a change:
More flexibility - Many people want to pay lump sums off their mortgage, or reduce it by means of regular monthly overpayments. If your current lender won’t allow you to do this – or wants to impose a penalty for making overpayments – then it might make good sense to look at what’s on offer elsewhere.
To borrow more - Sometimes you simply need to borrow more money. For example, your family may be growing and rather than move you’d like to extend and improve your present home. If your current lender won’t increase your mortgage, then there might be no option other than to look for a new lender.
A particularly attractive rate - It’s important to remember that your mortgage is only part of your overall financial planning, and there are times when your circumstances mean that a particular type of mortgage is attractive. You might be starting a family and need to keep your payments as low as possible for a couple of years or on the other han
d be near the end of your mortgage and would like the security of a fixed rate as the mortgage nears completion.
While there may be good reasons for moving your mortgage, switching does have disadvantages. There will certainly be costs involved if you change lenders. There is a good chance that you’ll be faced with a valuation fee and legal costs and in some circumstances you may also be charged a penalty (or ‘redemption’) fee by your existing lender if your current mortgage product has some time to run.
The costs of moving your mortgage can be significant – but the good news is that the arithmetic is relatively straightforward. If the saving you’ll make by moving outweighs the cost, then all well and good. Equally, you may feel that the benefits you’ll gain are still worthwhile, irrespective of the costs involved.
If ‘sort out mortgage’ is on your list of things to do this year, then it makes sense to speak to an experienced independent mortgage adviser. Whilst there are online tools available for mortgage comparison, they can be complicated to use and often misleading. In the current economic climate (with lenders being understandably cautious) there’s no substitute for experience and knowing both the market and the individual lenders. As well as finding you the best deal, a good mortgage adviser will explain all the different types of mortgage to you and help you find the one that is exactly right for you.
The mortgage marketplace still remains complex with so different decisions to be made. As such we have teamed up with a specialist in this area who is able to provide high quality independent advice for all of our existing and future clients. We hope that this will ensure that you have considered all of the options available and will also take some of the hassle out of reviewing your mortgage.
If you would like to review your mortgage or if you are looking at moving house please contact us so that we can put you in touch with our specialist. We look forward to hearing from you.