Wrong mortgage could cost £10,000+ in first five years
The internet has made the process of finding a mortgage quick, easy and relatively hassle-free.
However, many people who compare options online only judge the quality of a mortgage by its interest rate, when in reality selecting the correct mortgage for you should be based on a number of different factors.
A consumer recently found a mortgage and then challenged me to beat it. It was the lowest rate on the market, so in that respect I couldn't beat it, but it turned out the consumer had failed to take into account the initial fees, valuation costs and legal costs, nor had he considered the standard variable rate (SVR) at the end of the initial period.
With these factors included, a different mortgage was able to save him a staggering £10,000 in fees and interest over the first five years.
If you are looking for a mortgage, or want to remortgage, it could be worth chatting to an independent adviser to see how much you could save. VouchedFor offers customer reviews of mortgage advisers throughout the UK, many of whom offer free consultations.
More often than not very low rates only last a few years before jumping to the lender’s SVR. The next few years could see customers switching from the attractive rate they started on - 1.5%, for example – to a rate of more than 5.99%. This could result in people paying an extra £6,980 per year in interest charges on a typical £200,000 mortgage.
When it comes to mortgages, here are a few tips:
- Consider future changes in lifestyle, such as relocation and/or starting a family. These will go some way to determining how long you want to be tied to a mortgage.
- Research the lender you want to go with. Find out the SVR then see if you can switch to another mortgage rate at the end of the initial tie-in period.
- With BBR (bank base rate) so low there is only one way it can go, and everyone must be prepared so they can maintain mortgage payments when rates rise.
- Ensure you factor all fees into your mortgage calculations.
- Speak to an independent expert. VouchedFor allows you to read reviews of mortgage advisers in your area, and also lists those who offer a free consultation. Find a VouchedFor mortgage adviser.
- YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE -