|
13-01-08, 12:14 PM
Pepes many of you this year may be coming to the end of your fixed rate mtgs and because rates have moved on, whats now being offered to you means your mtg is more than likely to increase quite lot.
Don't panic, but get prepared before your deal comes to an end. If your mtg has no penalty charges after the fixed rate period (most do not, but check with your lender), then you're free to shop around for the best deal.
Tips for doing this.
Start with your existing Lender, go to them direct or online and see what they can offer existing customers. Ideally you really want a deal with the lowest rate and the least amount of arrangement fee (set up fee which can be zero). Decide if its fixed or tracker (variable rate that follows Bank of England base rate) that you want. The expectation is that rates are due to come down, so if you want to benefit from this and can afford a few rises if the worst was to happen, then choose the tracker option. Try and get one which has no early repayemnt charges at'll, so you can switch to a fixed rate if the climate changes. Or get one which only ties you in for 2 yrs max as we are still in uncertain times.
If you get a fixed rate, you have to decide whether its worth paying a fee to get the best rate or choosing a slighty higher rate with no fee. You need to work out what the monthly repayments are on both options, then deduct the two amounts to give you the difference in cost per mth. Then times this difference by the number of mths the fixed rate period is for and this will tell you whether its worth paying or not. For example if the difference between two deals saves you £2000 over a two yr period, but the deal costs £2500 to set up, then you would choose the alternative deal with a lesser or zero fee. (get advise on this if in the slightest doubt)
NEVER take a deal which has a 'tie-in' period. This means even after the fixed rate/discount period of the deal on offer, you are not free to leave until after a certain time without paying a penalty. Avoid this becuase within this tie-in period you will be stuck on that lenders highest rate for x amount of mths giving back all the benefits you originally reaped in the beginning of the deal.
If you do switch to a better deal with another Lender, try and get one which offers to pay your valuation and solicitors fees for you, several do.
If you use a broker, get one that doesnt charge a fee or a mimimal one if they do. (£299 max) tell the broker you are not paying any fees up front until you get a confrmation from the chosen lender, that they're happy to lend you the mtg. If they dont like this, then tell them to take it or leave it. If they really do leave it and you're desperate to get the deal, then offer them half the fee upfront. What you want to avoid at all costs is paying any non-refundable fees and then being told you've been declined for the mtg.
If you need any further clarification on these points then please discuss here or pm me if you prefer to keep it private.
Last edited by Le Moor; 13-01-08 at 04:05 PM.
|