I have received a letter from my mortgage lender offering me some attractive looking rates. Should I just accept one and be done with it?
It’s great to see that more mortgage lenders are getting quicker out of the blocks offering their customers a new deal upon maturity.
The days of just hoping the customer will fall aimlessly onto the standard variable rate for the rest of their term (and make the lender a tidy profit) seem to be drifting away, which is great for the customer.
I want to get under the bonnet of what you, the customer, should consider doing and a good brokers role in this.
So, following the rules of common sense and good business practice, a good broker ought to have a system in place keep in touch with you.
Why would you seek my help if I worked for you 5 years ago and never spoke to you since?
If I was lucky enough for you to still remember my name, the chances are you’ve lost my number. So, it’s vital that you’ve had regular communication from your broker throughout your mortgage term.
Most brokers will have a system to tell them when customers are maturing.
So, what to do?
Everyone seems to want to help you, which is great news!
The easiest thing to do is await a lenders letter, select a deal, call the number and book yourself a new rate! Job done!
Great for those of us who really know what they are doing and what they want BUT there are two major caveats.
Firstly, and most obviously, are you missing out on a better deal elsewhere?
If the deal is coming to an end, it might be a good time to take a rain check and seek the best deal you can.
There is a very good chance your circumstances may have changed, and/or economic conditions may have changed.
That means that 2-year fixed rate you did last time might not be the best solution going forward.
As an example, your advisor may well give you good reason to consider a 5-year fixed rate this time, despite your concerns about the higher monthly cost.
In terms of your own circumstances, after a few years in the same house are you considering moving?
You perhaps ought to be thinking about a penalty-free tracker deal, so that when you do move in 18 months’ time you have the choice of 50 or so lenders to find the right deal for you, not just the one you have tied yourself to.
In essence, I think most people need help, advice and an opinion and this is where your broker can help.
We have access to many lenders and their criteria. It is no good you tying into a lender for 5 years who will only lend you the equivalent of 4.75x your salary when you may need a larger multiplier in a couple of years to assist you with a move.
(Sorry, got a bit technical there!)
Lenders term a move to a new product as a “Product Transfer” but a good broker will call it a “Remortgage”. Why?
Well, we brokers and advisers have a duty to get you, the customer, the best deal for you.
It’s not about just pressing a button and keeping you with the same lender for eases sake.
We need to take into consideration timing, your circumstances changes to your income, and then document why we have chosen our final choice.
To conclude, here are my tips…
3 simple tips to changing your mortgage after a deal concludes:
1) Don’t do nothing. Inertia must not rule.
2) Just because your lender contacts you 5 months out, does not mean they offer the best for you.
3) No less than 3 months out ask your lender what they can offer and if your broker has not called you seek professional mortgage help and advice.
The only reason you should move to (and stay on a) standard variable rate is if you are thinking of selling up and moving on, or you have decided to move to a new lender in a short while.
Don’t take anything I’ve said in this piece as gospel for you. It’s always important to get personalised professional advice.
I’d be more than happy to talk your circumstances and options through.
Get in touch on 01453 887179 or by emailing email@example.com.