Archives August 2019

What is the advantage of a variable rate mortgage.

What is the advantage of a variable rate mortgage.

Making sure you make the right choice for your mortgage.

Mortgage’s can be very different from one to the next. They can have different lengths, for different amounts, different interest rates and different payments. There are lots of factors that affect this, your income, your outgoings, if you are married, where you live, how much you want to lend, how old you are. Lenders need to be so much more understanding and insightful to who they are lending too.

There are, however, generally two types of residential mortgage you can get. There is a fixed rate mortgage, and there is a variable rate mortgage. Fixed rate mortgage, is usually a set amount of time where on your mortgage you pay exactly the same amount. Hence the fixed rate. For example you may have a fixed interest rate on your mortgage for five years. Meaning all your mortgage repayments each month will be exactly the same for five years. No change.

The other is a variable rate, a variable rate mortgage means the interest rate on the mortgage can vary during the mortgage. This means that the cost of your mortgage monthly repayments can change throughout the time of your mortgage or agreed time. This doesn’t sound great but there are some advantages.

Within variable rate mortgages there are two subsections of mortgages. Tracker rate and Standard Variable Rate (SVR). A tracker rate mortgage follows the Bank of England base rate, so if they increase this rate then your mortgage rate goes up. But if the base rate drops then so does your mortgage. On a SVR you are at the behest of the lenders interest rate. So this can go up or down completely based on the lenders whim, quite often it follows the trend of the base rate set by the Bank of England. But it really is up to the lender.

With an SVR there are some additional advantages, and these are based on the market, as with the tracker rate they can go up and also down. But usually what ends up happening is if there is a high demand for mortgages, then the rate can go up, as its in the lenders best interest to do this. But if demand is low then the rate can be low. Which means a lower mortgage repayment.

The final advantage is that, it’s generally easier to get out of a variable rate mortgage. Most fixed rate mortgages have a set time you have to remain on the deal, or you will incur a fee. We are not saying there is no earlier charge on all variable rates, but they are usually shorter if they are there at all.

With getting a mortgage make sure you speak to someone to trust, and make sure you can afford if the rates go up as well as if they are currently low.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Why you may need to remortgage now.

Why you may need to remortgage now.

We have had quite a few blogs on how to get yourself ready for a remortgage, the idea behind our blogs is to help people to get the right advice to help get them ready for all elements of mortgages.

Last couple of weeks, there have been reports about why it is a good time to re-mortgage. In October, over £26bn worth of mortgages deals are due for renewal. Which is the largest for the month this year. So why are we telling you this. Well anyone who’s mortgage deal is up means that you could potential save a lot of money on your mortgage.

At the moment there is scope to save hundreds each month on your monthly mortgage payments. With much more competitive rates these days people coming out of a 5 year mortgage maybe looking at something much better than what they are on now.

On top of that your mortgage value could be better. If your house has appreciated in value. It means your loan to value ratio will be better and you may qualify for an even better rate:

Official Land Registry data shows that the average UK house price in October 2014 was £191,855, and had risen to £229,431 by May this year (the latest month for which figures are available) – an increase of just under 20%.

The Yorkshire says a homeowner who initially borrowed 85% of a £200,000 property in October 2014 at a market-average five-year fixed rate of 4.25% could benefit from a lower LTV of 65% and take advantage of the society’s two-year fix priced at 1.54%, which would save £201 a month in repayments. (However, this deal does involve paying a £1,495 product fee).”

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)

Please see the full article here

What should you do then? Well with remortgage it is always a very individual situation so it is hard to tell you what to do, but its always worth checking your deal and when it expires, most have a period before when you can move out of the deal to another without incurring costs.

Then speak to someone you trust. It is the best way for you to make sure you see the whole of the market and get the best deal you can. Don’t just speak to your lender. They have a limited amount of products they can offer. So for a potential of £200 savings per month, it is worth spending the time to get the right deal for you.

 Your home may be repossessed if you do not keep up repayments on your mortgage.