Grab a mortgage bargain – before they disappear!

MORTGAGE borrowers with fixed rate deals ending as far away as next June should grab a new loan now before record low rates vanish.

Experts say the fallout from Brexit and Donald Trump’s election triumph in the United States mean the only likely direction for loan rates is up.

Mark Bogard, chief executive of The Family Building Society, says: ‘We have seen some swap rates – the rate at which lenders borrow on the money markets to lend to customers – double in the last few weeks, especially since Trump’s victory so it is probable that rates for borrowers will rise.’

CHEAPEST EVER DEALS

FIVE-year fixed rate loans are the cheapest they have ever been, on average below 3 per cent. They have the added attraction of carrying borrowers through the ups and downs of the Brexit process.

With the gap between the average two-year fixed rate (2.35 per cent) and the average five-year fix at just 0.63 percentage points, according to rate analyst Moneyfacts, borrowers can now opt for the security of a longer term fix with little extra cost to monthly repayments.

Ray Boulger of mortgage broker John Charcol believes ten-year deals as low as 2.39 per cent – from Coventry Building Society – are also worth a look by anyone who predicts a stable work future for themselves or who is prepared to shoulder hefty early redemption penalties if they later want to remortgage.

BOOK EARLY

BORROWERS keen for a bargain can secure a deal up to six months in advance, depending on the lender. Searching now, before a current deal expires, means avoiding spending too long on a lender’s expensive standard variable rate, or being forced to take a dearer fixed rate loan that may be around the corner.

BE PREPARED

IT IS not too soon for those with a deal expiring next summer to start looking for a replacement.

Boulger says: ‘Even if you start looking now, by the time you have shopped around, spoken to a broker, completed the fact find and found the best mortgage option, you might only have three or four months to go until your current loan deal ends.’

A key benefit of starting the shopping around early is the chance to sort out any thorny issues that might deter a lender from granting you a new loan.

Boulger says: ‘You can resolve issues such as a failed direct debit or bounced cheque that might have caused a black mark on your credit record. It also gives you time to rein in any excessive expenditure that could put off a lender.’

Borrowers setting a search in motion now might secure an offer in January that they could keep in their back pocket until June 2017.

SLOW THE PROCESS

IF THE remortgage process starts moving too quickly, exposing yourself to early redemption charges on your existing loan, you can always delay by taking that bit longer to send any information requested by the lender in advance of it making an offer.

Most lenders will warn borrowers when their loan end date is looming. Some will even try to persuade customers to move to another of their deals, waiving any exit fees and possibly arrangement fees.

Boulger says: ‘Santander has a large number of customers on fixed rates coming to the end of their deals. It is currently encouraging them to sign up to new offers. The new loans available may be attractive for some people but before agreeing always look elsewhere first.’

SEEK AN OFFER WHILE ON A HOUSE HUNT

PROPERTY purchasers who want a cheap loan have less flexibility than remortgage customers.

Brendan Gilligan, mortgage product manager at Yorkshire Building Society, says: ‘As a buyer, you can’t secure a mortgage until you have had an offer accepted. But those on a house hunt can get an application accepted in principle. This will help the application process run more quickly once they have found a home.

‘It is simple to obtain but this lending decision is only available for a limited period, in our case 30 days.’