According to the government Money and Pensions Service, they think it’s a good idea to review your mortgage at least once a year to check whether you should switch to a better deal.
When was the last time you had a mortgage check-up?
‘It’s a good idea to review your mortgage at least once a year to check whether you should switch to a better deal’UK Government Money and Pensions Service Advice
Try Answering these questions… any doubt then talk to a good mortgage broker
- Do you know that your current mortgage is as competitive as the best new deals on the market today?
- Have your circumstances changed recently?
- Is your current mortgage the best for you right now?
- Does your mortgage offer you the degree of flexibility you need?
- You may be able to save hundreds – perhaps thousands – of pounds by shopping around
- You may be able to choose a new mortgage offering greater flexibility that suits you better
At the very least, you should review your mortgage:
- When interest rates change – because this will affect how competitive your current deal is
- When your current mortgage deal approaches comes to an end
- When your circumstances change
- Once a year if you’re not tied in to deal with early repayment penalties – to see how your current deal compares to new deals that have come onto the market
- If you do nothing when rates change or your mortgage deal ends, you could lose out to many better deals that are available in the market.
Look out for re-mortgage costs
Although you can often reduce your payments by switching, bear in mind that there are a number of costs associated with re mortgaging. There might be high early repayment charges to pay if you are leaving before the initial locked-in period of your mortgage expires. There are unlikely to be charges if you’re on your lender’s standard variable rate.
Your new lender might charge you valuation and legal fees, although these are often waived if your re-mortgage is successfully completed. Always ask about these fees when comparing products. There may be an exit fee to pay when you leave your current lender. Factor this into your costs. There may be a booking or arrangement fee to pay on the new deal – you can opt for a fee-free deal to avoid booking or arrangement fees, but you might end up paying a higher interest rate as a result.
Since April 2014, lenders have to look much more closely at whether you can afford a mortgage because of new regulations. This means it might take longer than you’re used to and you’ll have to provide proof of your income and all your outgoings
You could be asked for:
- Your payslips and bank statements to prove your income
- Your tax returns and business accounts completed by an accountant if you’re self-employed
- Your outgoings will be set against your income to see how affordable your mortgage is
They will look at your:
- Household bills
- Other debt repayments
- Living costs such as travel, childcare and entertainment.
How much can you save by re-mortgaging?
- When you make the switch, if monthly payments are going to be lower you can choose either to make reduced payments or – better still – stick to your original payments and reduce the mortgage term
- Let’s say you have £175,000 still to repay on your mortgage with a remaining term of 20 years. You’re on a 5% deal repaying £1,115 a month
- This means more competitive deals are now available to you and, if you reviewed your mortgage today, you might be able to switch to a much cheaper deal of just 3%
Example monthly repayment saving if switching from a 5% to a 3% deal
Comparison websites won’t all give you the same results, so make sure you use more than one site before making a decision. It is also important to do some research into the type of product and features you need before making a purchase or changing supplier
Consider using a ‘whole of market’ mortgage advisor – your mortgage advisor will look carefully at your existing mortgage deal, your individual circumstances and your financial goals and objectives before recommending a change.
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