The last thing a mortgage borrower wants to hear are the terms ‘payment shock.’ But, thousands of mortgage borrowers may have to get ready for this ‘shock’ when their current offer expires. The only solution may be to check your current deal and plan according before disaster strikes.
Anyone who doesn’t switch to a new deal before their current one expires, may see their monthly bills inflate by a hundred pounds. Two-year fixes were wildly popular in 2013 and 2014, but those who jump on that rate, may be hit the hardest. If one is unable to find or qualify for a better deal, then, they face the possibility of automatically being put on their lender’s standard rate, which likely sky-rocketed in the past year. The fact that the Bank of England’s base rate has stayed at a record low of 0.5, is unlikely to help borrowers who are unable to find a better deal.
Most standard variable rates land at around 4.82 percent with most mortgage lenders, found here. Societies such as Skipton and Yorkshire though, charge more. In addition, the longer you wait to switch to better rate, the more likely your future finances will be at a greater risk.
Senior researcher at Moneyfacts, Charlotte Nelson says, “fortunately, you can avoid the pain of a standard variable rate mortgage by switching on to a better rate before you get moved on to the SVR. There is stiff competition among lenders to offer the lowest rates for people looking to remortgage, so this is a good time to find a new deal.”
Finding the best deal for your family’s future can be tricky, though. Some tips for finding a suitable deal can be found here. They urge buyers to not just consider the low rate, but to consider fees, the type of mortgage and the size of the deposit. The site reminds buyers that not everyone who applies, will succeed. Thankfully, the site includes a mortgage calculator to help you complete the evaluation and estimation process.
It is wise to approach your lender in search of a better rate at least two to three months before your current deal expires. The buyer must stay in contact with the lender throughout this process to gather any and all information. The good news is, most lenders will let you hold a new deal for up to six months before you transfer to that plan. Bidding wars can occur at this point as well – a great thing for buyers. Some lenders will offer no-fee remortgage packages to try to pry customers from other lenders. This may be the deciding factor for many prospective borrowers.
While it always seems the lender can get the best of the borrower, the opposite may be true in some specific cases. If your property value has gone up, while your mortgage rate has declined, then you may be able to receive some of the best loan rates possible. This is certainly not a terrible time to be a home-owner, and, with proper precautions, borrowers can set themselves up for a future of financial stability.