Do we have to shout? Switch your mort­gage!

Not shift­ing your lender is the equiv­a­lent of turn­ing down a big pay rise. By Sara Yates

Evening Standard - West End Final Extra - ES Homes and Property - - Finance -

MORE than a fifth of mort­gage pay­ers won’t shift to a new lender, no mat­ter how good a new deal they are of­fered, ac­cord­ing to re­search from YouGov and Habito. Mort­gage ex­perts say stay­ing put is the equiv­a­lent of turn­ing down a pay rise.

Ac­cord­ing to the new data, more than a third of bor­row­ers haven’t changed their mort­gage in the past five years, de­spite an abun­dance of deals on of­fer. This means that home­own­ers could be un­nec­es­sar­ily over­pay­ing by thou­sands of pounds a year.

Most at risk of over­pay­ing are home­own­ers whose deals have ended and have moved to their provider’s stan­dard vari­able rate (SVR).

“Now is the time to con­sider re­mort­gag­ing,” says Jeremy Dun­combe, di­rec­tor at Le­gal and Gen­eral Mort­gage Club. Bor­row­ers on an SVR could save “the equiv­a­lent of a monthly pay rise or a fam­ily hol­i­day at half-term,” he adds.

Mort­gage rates plum­meted again this year. With only 10 per cent eq­uity in your prop­erty, HSBC, First Di­rect and York­shire Build­ing So­ci­ety all of­fer mort­gages with a two-year fixed in­ter­est rate be­low two per cent. If you are lucky enough to own up to 40 per cent of your prop­erty, you can get a fixed in­ter­est rate be­low one per cent with York­shire Build­ing So­ci­ety (plus fees of £1.825).

If you pre­fer to have a mort­gage that tracks the rate set by the Bank of Eng­land, HSBC of­fers the low­est rates. The best, re­served for home­own­ers with an LTV be­low 60 per cemt, is just 0.74 per cent above the base rate. This means it is just 0.99 per cent.

But even if you only 10 per cent of your prop­erty, the rate only rises to 1.59 per cent above the base rate, at 1.84 per cent. In all cases a £999 book­ing fee ap­plies.

These rates are all a far cry from the lenders’ SVRs. For First Di­rect and HSBC the rate jumps to 3.69 per cent ig­nor­ing the count­less mortage deals on of­fer can cost dearly

at the end of the two-year deal, while for York­shire Build­ing So­ci­ety it is an eye wa­ter­ing 4.74 per cent. Even more ex­or­bi­tant are Leeds Build­ing So­ci­ety, Ac­cord Mort­gages and Fur­ness Build­ing So­ci­ety who all have SVRs above five per cent. Could you give your­self the equiv­a­lent of a hefty pay rise by re-mort­gag­ing? Comparison web­sites are a great place to start. They take sec­onds and give you at least an idea of how much a new deal could save you each month. Do re­mem­ber to in­clude the fees in your comparison. These vary in name, but are typ­i­cally up­wards of £1,000 to take out a mort­gage, plus a £100 or more to have your prop­erty val­ued. Other fees may also ap­ply.

Once en­er­gised by the po­ten­tial sav­ings, you have a choice: speak to the providers di­rectly or use an in­de­pen­dent mort­gage bro­ker. If you want an easy life, opt for the bro­ker. They sur­vey the market, help you pick the right deal and mean you only need to give them your per­sonal in­for­ma­tion once. Best of all, many won’t charge you a penny. In­stead, com­pa­nies such as on­line bro­ker Habito levy the fee on the lender, with the amount fully dis­closed.

You can make the process smoother and quicker by col­lat­ing your pa­per­work in ad­vance. Just like when you took out the ini­tial mort­gage, you’ll likely need proof of your iden­tity, earn­ings and where you live.

This means dig­ging out bank state­ments, payslips, your P60, util­ity bills, pass­port and if self em­ployed, your last three years’ ac­counts/tax re­turns. If you have gone pa­per­less, ex­pect to get some of these cer­ti­fied by your bank or a pro­fes­sional.

Even for the su­per ef­fi­cient get­ting a mort­gage takes time, of­ten four to eight weeks. For­tu­nately many lenders will honour your mort­gage of­fer for at least

three month. So start early. There re­ally is no need to get sucked onto an ex­pen­sive SVRs.

Your mort­gage is likely your big­gest fi­nan­cial obli­ga­tion; don’t let it be your big­gest blind spot.

In­stead, chan­nel your will­ing­ness to switch phone and util­ity providers to get the best deal and save your­self a packet.

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