Mortgages. Short Term Advice
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Mortgages: Short-Term Advice
Exploring New Home Loan Options
As new varieties of home loans emerge, many are being marketed as lifetime loans. Does this mean the end of short-term mortgages? Not necessarily. There are still great deals available if you're willing to shop around.
Short-Term Mortgage Strategies
Mortgage brokers often recommend discounted short-term mortgages, advising clients to regularly seek better deals after initial discounts expire. This practice is common and beneficial for those looking for the best rates. Brokers do much of the legwork, making the process easy and hassle-free.
Borrowing Tips
For Loans Over £150,000
For those borrowing over £150,000, it's wise to have your broker search for discounted rates. This strategy remains highly recommended.
For Loans Under £150,000
New low-rate lifetime loans might seem attractive for smaller loans. For instance, Abbey and Woolwich offer low-cost home loans. Woolwich offers a lifetime tracker mortgage at 0.19 percentage points above the base rate, translating to a current rate of 4.69% with the Bank of England's base rate at 4.50%.
In comparison, Portman Building Society offers a two-year fixed-rate plan at 4.19%, which is cheaper than Woolwich's option. However, switching mortgage providers involves costs:
- Legal fees: Approximately £350
- Application fee: £499
- Valuation fee: Around £300
- Deeds release fee: £199
These expenses total nearly £1,350 on a £150,000 loan. While you might save £1,500 in interest with Portman's deal, the savings are minimal. Switching to another deal after two years is necessary to avoid a potential 6.5% rate.
Flexible Options
Abbey's Flexible Plus Tracker offers a higher rate at 5.09%, but its flexibility allows you to reduce your loan balance by offsetting your mortgage. You can also withdraw funds as needed, using the mortgage like a savings account, with withdrawals charged at the mortgage rate.
Conclusion
While new loans offer competitive options, the mortgage market is always changing. To secure the best deals, consult your online broker to explore the current market offerings. They'll help you find the optimal deal tailored to your needs.
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