It can be hard enough to keep track of the kids after school activities, whether you’re hitting your daily steps target and who’s turn it is to fill the car with petrol. Without factoring in the seemingly endless announcements about rising prices and mortgage interest rate changes.
But at a time when every penny counts, are we missing a trick if we let mortgage industry news wash over us?
Jo Jingree, owner and mortgage adviser at Mortgage Confidence thinks so: “Naturally, I’m that person with alerts on my phone for interest rate news and changes. But I do appreciate that for many others it’s lower down their list of priorities.”
What’s the state of play with your mortgage?
If you haven’t given your mortgage a minute’s thought since you took it out, then read on.
The term of a mortgage is often around 25 – 30 years. But the rate you agree to pay (and therefore your monthly repayments) is usually only put in place for 2, 3 or 5 years. This is your ‘deal’.
The two most common types of deal are fixed rate and tracker mortgages.
The interest you’re charged is fixed for the length of the deal. Usually one, two or five years. Perfect for those who want certainty about their monthly repayments.
A tracker mortgage usually follows the Bank of England Base Rate. The amount you pay each month can fluctuate if the base rate goes up or down. Great news if the base rate drops. But if it rises, so will your repayments.
When to pay attention
Once your deal period is nearing its end it’s time for you – or your adviser – to leap into action. Ideally, it’s worth starting your planning around six months before your deal expires to allow plenty of time to get organised.
If you do nothing when your deal expires then your lender will start to charge you interest at their standard variable rate (SVR). This is likely to be more expensive than your existing deal.
So, what are the options when my deal expires?
There are two main options. With a product switch you swap your mortgage onto a new deal with your current lender. Since this doesn’t involve any underwriting, it’s not assessed in the same way as a complete remortgage with a different lender. Which makes the process reasonably quick. The other option is a remortgage.
What is a remortgage?
This is when you apply for a new mortgage with a different lender but stay in your existing property.
The benefit of a full remortgage is that you have access to the most competitive interest rates. Plus:
- You can find a mortgage deal that will suit your current financial situation
- You may be able to release some equity in your home to provide additional cash if you want to consider some home improvements, or perhaps pay for school or university fees.
What do I need to do?
Over to Jo to explain: “The first thing is to find out when your existing mortgage deal expires. Then it’s a matter of researching what deals are available and what best suits your particular circumstances.
“The main thing is to make sure you just don’t roll onto your lender’s standard variable rate through inactivity.
“If that all sounds like hard – and not particularly interesting work – then why not book an appointment with an independent mortgage adviser who will chat it all through with you?”
Jo Jingree has been working in the industry since 2000. She’s a multi-award-winning mortgage adviser and offers a free 30 minute no obligation phone call. She cannot help with after school activities, step counting or refuelling the car, however!
Get in touch with Jo.
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