With Covid-19 delivering a hit to many borrowers’ finances in one way or another, making sure you aren’t paying more than you absolutely need to for your mortgage is vital. Your mortgage is likely to be your biggest outgoing and while you may have done your research and taken out a great product in the first instance, if you don’t monitor it over time you may find that it ends up costing you in the long run.
The worst thing that can happen is that you slip onto your lender’s standard variable rate (SVR) at the end of your fixed or discounted period. The SVR tends to be much higher than the best remortgage deals on the market, potentially costing you hundreds, if not thousands, of pounds a year. Making a note of when your introductory offer comes to an end and speaking to a whole-of-market broker such as AWS Financial Services at least six months or so before that to find out what deal we can get for you, makes financial sense.
Many borrowers wrongly assume that their existing lender will give them the best deal. Loyalty and an existing relationship has to count for something, right? Well, no, this isn’t always the case. Your existing lender may offer you a great rate to move onto – known as a product transfer – at the end of your existing deal to avoid having to go onto its SVR, but there is no guarantee that it will be competitive.
It is always worth comparing what your lender is prepared to offer you with what else is on the market. Of course, going to another lender because they are offering a more competitive rate will mean having to go through another mortgage application – and you may be concerned about this if you have been furloughed – but at AWS Financial Services we can advise and handle this on your behalf.
If a product transfer with your existing lender is the best option for you and you have been furloughed, it should not impact your new deal. A product transfer doesn’t require a full affordability assessment so even if you are furloughed it won’t make a difference to your level of borrowing. However, if you are extending your mortgage at the same time as moving onto a new rate, your lender will look at affordability and this is where reduced furlough income may have an impact on the amount you can borrow.
If you have been furloughed, it is worth seeking advice as to your position when it comes to remortgaging. It may be that your ability to do so will be impacted if you are furloughed on a lower income but much will depend on your particular circumstances and the loan-to-value (LTV) you require. Most lenders will take furloughed income into account, as well as any top-up from your employer, as long as you can provide written confirmation of this.
One issue during lockdown was that the vast majority of lenders pulled back from offering high LTV deals because they couldn’t get a surveyor out to value the property and had to rely on desktop valuations. This isn’t so much of a problem with a relatively low LTV but is more of a risk to the lender the higher the LTV. However, now that valuations have resumed this won’t impact your ability to remortgage even if you need a relatively higher LTV of say 85 or 90 per cent.
With a number of lenders reducing their fixed and base-rate trackers even more on the back of falling Swap rates in an effort to compete for business, there are plenty of attractive deals on the market. With two- and five-year fixed-rate remortgage deals starting from sub-1.5 per cent, get in touch to find out what is available and ensure you are not paying over the odds. ends