For most people a mortgage is their biggest financial commitment and it makes sense to reduce that cost wherever possible. At present mortgage interest rates are at an all time low, even the standard variable rate (SVR), which most mortgages revert to after the initial discounted offer are at very low levels.
Compare Remortgage Quotes
For first time buyers it’s a particularly tough time to get a good mortgage deal but for those who already have a mortgage and have an excellent credit score, it’s definitely a good time to compare some remortgage quotes from an independent mortgage broker. Despite the current low levels of interest it may still be possible to save money on a new remortgage deal. For those who are still using an endowment insurance policy to repay their mortgage it is a particularly good time to check out a new remortgage deal.
However Martin Lewis, one of the UKs most respected financial journalists makes the point, “Before you go anywhere, challenge your current lender to give you a new offer. Remember, it makes money from your debt so it does want your custom.”
Compare Remortgage Deals
It’s important to add a note of caution at this stage. Borrowers must make sure that when comparing remortgage deals they compare like for like or get a professional independent mortgage broker to work out, over the term of the mortgage, the savings to be made.
There are a number of charges that may be applicable on new mortgages and must be added to the equation. For example:
Exit fee on current mortgage
Early repayment fee on current mortgage
Arrangement fee on new mortgage
House valuation fee
Where to Find the Best Remortgage Rate
An Internet search for the best remortgage rate will inevitably reveal hundreds of companies offering what they claim is the lowest remortgage quote. However borrowers should be aware that most of these companies will only be offering their own financial products and therefore don’t make any comparison with the products offered by their competitors.
Independent Mortgage Broker
So borrowers looking for the best remortgage rate should take the time to research the market thoroughly, perhaps starting with one of the price comparison sites or asking an independent mortgage broker to do the work for them.
If using a mortgage broker it’s important to ask the question, “Are you an independent mortgage broker with access to whole of market,” which means does that broker have access to all remortgage deals that are on offer.
How to Reduce Mortgage Payments
As the cost of living and personal debts continue to rise, securing a lower mortgage interest rate to bring down mortgage payments has never been more important. Moving from a Standard Variable Rate to a fixed or tracker mortgage could save a borrower thousands each and every year.
Costly Standard Variable Rate Mortgages
If it has been several years since the last remortgage, there is a strong possibility that the borrower is on a Standard Variable Rate (SVR). SVR only serves to help the lender as the rate is typically 2% or more above the Bank of England base rate.
It is possible to save money by getting a remortgage. Getting a tracker or fixed rate mortgage can literally save hundreds every month. For example, an online mortgage calculator reveals that a fixed rate mortgage at 5.5%, as opposed to an SVR mortgage at 7.5%, would save a borrower £250 each month.
This saving could be used to reduce the mortgage term and minimise total interest paid. It could even be the difference between being able to afford the mortgage payments if debt problems present a worrying life issue.
Subprime Mortgages for Those with Adverse Credit
Subprime mortgages are designed for customers that have adverse credit. That includes those with statutory defaults, CCJ’s or missed payments. The adverse credit market has increased massively because of the volume of serious debt problems in the UK.
Mortgage interest rates vary considerably between borrowers, but getting the best one based on a customer’s credit profile is key to saving money. Those with a subprime mortgage can be paying as much as double that those with good credit pay.
Once making payments for a couple of years, it can be sensible to get a review to see if a better mortgage interest rate can be achieved. A better payment record should mean that a customer can reduce mortgage payments.
The Subprime Mortgage Mis-selling Scandal
Many customers have been victims of adverse credit mis-selling. Subprime mortgages for the most serious credit problems, such as bankruptcy, have been sold to those with only minor adverse problems like a late monthly payment.
Subprime mortgages have even been sold to those with perfect credit because the borrower was told that they couldn’t get a mortgage because of being self employed. This was to secure mortgage advisors higher commissions which isn’t legal.
If sold a subprime mortgage, check to see if the loan agreement is an unenforceable mortgage agreement for reasons alluded to. This could entitle a borrower to compensation or even have the entire mortgage written off in certain circumstances. A Financial Ombudsman is able to make a decision regarding this matter.
Existing Fixed Arrangements – Early Redemption Penalty
If a fixed rate mortgage has been agreed when interest rates were higher, it is possible to move to another lender but an early redemption penalty will be charged. Realistically, it is only sensible to seek a more favorable mortgage interest rate when the fixed term ends and switches to Standard variable rate.
Independent Mortgage Brokers
Independent mortgage brokers are able to check the entire market for the most favorable deal. Most banks are tied agents and can only offer their own restricted product range. Don’t simply use the same mortgage provider because it’s easier as the small fee paid will save a lot more than it costs.
It is possible to get a copy of a personal credit report from Experian, Equifax or Call Credit. Check the report for any errors as these can be corrected. Correcting errors can result in a better credit rating and mortgage interest rate being offered.
There are some favorable offers available in the current market that will allow a borrower to cut mortgage payments. Use an online mortgage calculator to check potential savings and always utilize the services of an independent mortgage broker so that the entire market can be checked for the best deal.
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