Mortgages - An Important Date
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Mortgages: The Key Date You Shouldn't Miss
Keeping track of your mortgage terms can save you a significant amount of money and hassle, and a timely reminder from your mortgage broker might be exactly what you need.
While the Financial Services Authority (FSA) is satisfied with the existing rules for renewing two or three-year home loans, many mortgage brokers report a different reality. They note that borrowers often find the system confusing, which could result in unnecessary expenses.
As your short-term mortgage nears its end, a reminder from your lender would be beneficial. However, lenders are not required to inform you when your term is ending?"they are only obligated to notify you if your interest rate is changing, typically leading to increased payments unless rates unexpectedly drop. Generally, the rate offered post-term will be the standard variable rate (SVR), typically about 2.25% higher than your current rate.
If you mistakenly transition to a SVR, acting quickly is essential. For example, with a £100,000 loan, lowering your interest rate by just one percentage point could save you roughly £1,000 annually.
Allow around four to six weeks to switch to a different lender to ensure a smooth transition. The FSA advises reviewing the Key Facts document from the start of your mortgage, which outlines your loan's end date. Make sure to note it down.
Notification practices vary among lenders. Some will alert you three months in advance, while others notify only a few weeks before, potentially leaving you on a higher rate as you make arrangements. Some lenders might not inform you at all.
While shopping around for lower rates is wise, don’t automatically rule out sticking with your current lender. Staying can save on costs like exit fees, often around £300, as well as valuation and legal fees. It's worth checking their offer first.
The mortgage market is competitive. Many companies want your business and may help cover transfer costs, including valuation and legal fees, to entice you.
A mortgage broker can be invaluable by researching and comparing deals for you, minimizing the paperwork after you've shared your details. They’ll handle finding the best deal when it's time to renew.
Start by searching for mortgage brokers online to make the process easier.
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