Remortgaging Is It Worth Being A Rate Tart
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Is Remortgaging Worth Being a 'Rate Tart'?
Summary
In the mortgage world, those who frequently switch lenders to take advantage of lower rates are dubbed "Rate Tarts." Despite the nickname, these savvy shoppers know that the best deals come from exploring options. With fierce competition among lenders, interest rates remain the key factor attracting customers.Article Body
In the mortgage industry, individuals who constantly switch lenders to secure lower rates are often labeled as "Rate Tarts." However, this name does little to deter them. These are financially astute individuals who recognize that shopping around is the best strategy for securing the most cost-effective deals.With mortgage lenders fiercely competing for customers, various incentives such as free valuations and waived setup fees are offered. Yet, it is ultimately the interest rate that seals the deal. As long as this remains true, "Rate Tarts" will continue to thrive.
Lenders are taking different approaches to maintain their market share. Some have increased up-front charges to deter frequent switchers, while others focus on retaining existing customers through attractive incentives. Unfortunately, raising fees can backfire by shrinking market share, despite healthier profit margins.
Take Birmingham Midshires, for example, which offers a seemingly appealing 3.89% two-year fixed deal. However, the arrangement fee of £1,499 is substantially above the standard £500, effectively adding another 0.75% interest on a £100,000 mortgage when spread over two years.
Steps to Consider When Remortgaging:
1. Calculate All Remortgaging Costs:
- Valuation fee (around £250 on a £100,000 mortgage)
- Arrangement fee (about £500)
- Booking fee (potentially £50)
- Legal fees (approximately £350 on a £100,000 mortgage)
- Encounter any redemption penalties for exiting your current lender
2. Negotiate with Your Current Lender:
- Contact your mortgage provider to inform them of your intention to switch due to a better deal.
- Your provider may offer a competitive rate to retain your business.
- Without making this call, the potential savings might remain out of reach.
Once you have gathered all the information and costs involved with switching mortgages, the decision is yours. If your current lender provides an improved quote, the choice might become more straightforward.
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