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In knots over mortgage rates - do I switch mine?

(9 Posts)
Vic98765 Mon 16-Oct-17 14:52:51

I am forever reading articles like this one telling me it's time to change my mortgage.

Doesn't it cost a bucket load of fees to change anyway? Brokers fees, searches, legal stuff?

How can it be cheaper when the rate goes up the longer you fix for?

AwkwardPaws27 Mon 16-Oct-17 15:10:16

I used a free service (London and Country) recommended by Money Saving Expert a couple of years ago - service was ok, a bit slow, mainly communicating by email so this slowed things down a bit.

I paid a local broker (£199) when we moved recently, and had great service, sorted very quickly, and got a good rate on a two year fix (1.41%).

Both options got me much better rates than I would have been able to access if I;d just gone to my usual bank, and saved time, so I think a broker is a good idea.

If you go onto a variable rate at 1.5% it could go up (or down) at any time. If you get a fixed rate, you know you'll be paying that rate (and a set monthly amount), for the period specified. If you fixed now at 2%, the standard variable mortgage rate could rise to 5% and you would only pay 2% until your fix ends.

Keep in mind, if you pay off the mortgage or sell the property within the fixed period, you may need to pay an early repayment fee (usually between 1-4% of the mortgage value). So, if you want to sell in a couple of years, I wouldn't fix for more than two years.

AwkwardPaws27 Mon 16-Oct-17 15:13:43

Oh, and not all mortgages have fees, although the cheapest ones often do. You can pay the fee up front (and save interest) or add it to the mortgage. I think mine was £999, and we will save more than that in interest over the two years than if we had gone for a fee-free mortgage which had a higher interest rate. Just divide the fee by the number of months, and see which works out cheaper for you.

HipToBeSquare Mon 16-Oct-17 15:17:21

I use L&C too. We've just fixed for 5 years with no early repayment charges as we are selling but wanted to fix in case we didn't sell and got stuck here have to stay a little longer than planned smile

SandLand Mon 16-Oct-17 15:28:51

It depends on what rate you are paying now how much you might save.
But say switching to a 5 year fix saves you £50 a month. You save 600 a year. If it costs 1200 to switch, years 3, 4 and 5 are pure savings.

But if You are only going to save 15 a month, it's not worth doing with those fees.

Bare in mind the furrentvralm us of interest rates going up soon. So if you are on a variable rate, your repayments are going to rise soon anyway....

JoJoSM2 Mon 16-Oct-17 15:51:24

We didn’t pay broker fees as we didn’t use one. We paid about £700 in fees to the bank but that was after a discount for banking with them. We fixed for 5 years at 1.69%. That was the best option for us.

If you remortgage, you need to consider any early repayment charges on your current product. Also fees vs higher interest, amount outstanding etc. Just a case of sitting down and doing a bit of number crunching.

There are some online calculators that will help you work out monthly repayments and amounts out outstanding after 1, 3, 5 or however many years.

Vic98765 Wed 18-Oct-17 09:45:34

Thank you - I think a broker is the right way forward

whiskyowl Wed 18-Oct-17 11:57:39

It really depends on the deal you currently have! Interest rates are definitely going to rise from November, so bear that in mind.

LeavesinAutumn Wed 18-Oct-17 17:40:39

op first direct has brilliant mortgages are a great bank to deal with as well, often their mort don't have fees go to mort calculator and have a look. we have never used a broker.

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