Remortgaging Is It Still Worthwhile
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Is Remortgaging Still Worth It?
Summary
Some mortgage lenders call those who switch to better rates "Rate Tarts." However, a more suitable term would be "Shrewd Shoppers." After all, who pays more for the same product?"money?"when cheaper options are available elsewhere?
The Competitive Mortgage Market
The mortgage market remains highly competitive, with price being a primary battleground for lenders. As long as this continues, savvy homeowners will be drawn to better deals. Whether you call them "Rate Tarts" or "Shrewd Shoppers," they benefit financially.
In response, some lenders have increased up-front fees, while others have enhanced customer retention strategies. While the best retention programs may be applauded, higher charges can deter customers and reduce market share, despite improved profit margins. It seems lenders could benefit from learning that incentives work better than penalties.
For instance, Birmingham Midshires offers a two-year fixed rate of 3.89%. This might seem appealing until you notice the hefty arrangement fee of £1,499, far above the market average of £500. When spread over two years, this fee effectively adds about three-quarters of a percent to the interest on a £100,000 mortgage.
Steps to Consider Before Remortgaging
If you're considering remortgaging, follow these steps:
1. Calculate Total Costs: Add up all costs, including valuation fees (around £250 for a £100,000 mortgage), arrangement fees (typically £500), possible booking fees (£50), legal fees (approximately £350), and any exit penalties from your current mortgage.
2. Contact Your Current Lender: Let them know you're considering leaving for a better deal. Lenders often rely on customer inertia, assuming most won't bother with the hassle and costs of switching. Press them for a better offer?"if they only offer their standard variable rate, they might not deserve your loyalty.
3. Compare Offers: Once you have all the costs and potential new deals, and have spoken to your current lender, you can make an informed decision.
Conclusion
Make sure to thoroughly assess all associated costs and deals before deciding to remortgage. For further information, websites like Brokers Online offer valuable resources, including access to life insurance quotes and various UK financial services.
Discover more insights: How Do I Know If I Should Switch Mortgages?
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