Warning: The Dangers of Remortgaging
Posted by siteadmin on Wednesday 19th of October 2016.
Many people could save a substantial amount of money by remortgaging. However, please take heed of these warnings:
1) The lowest interest rates can be loss leaders. For example, you might get a two-year fixed rate at 1.25% that jumps to 5% on your 25th payment. This means your interest payable per month will increase from £312.50 to £1250 per month on a £300,000 mortgage. These lenders rely on customer inertia to make huge profits, knowing some homebuyers or investors will not consider remortgaging early enough.
2) Arrangement fees of around £1500 are quite common. Check fees before arranging a mortgage.
If your tracked or fixed interest rate on your mortgage comes to an end this winter, and if you look at alternatives within the next few weeks, you could easily have a better deal in place before you’re forced to make higher monthly payments.
We can generally reserve you a lower-rate mortgage for up to six months – which could save on monthly repayments if interest rates were to rise over this period.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Scottsdale MoneyWISE mortgage advisers know how to work out if a deal is genuinely good value, and what arrangement fees are reasonable. We also contact clients before their fixed or tracked rate period comes to an end, to help avoid an unnecessary hike in payments out of your household’s budget.
If you’d like us to remind you when to look at alternative mortgages, before your monthly payments rise, call us and tell us when your tracked or fixed term ends. If you need help now, please contact us and ask for Nick Konkol.