Real Estate

Remortgaging your home

Finding the right mortgage is a very important financial decision in life as it is more often than not the largest single expenditure in people’s lives! People will often search the supermarkets shelves for bargains choosing products for the sake of a 1p or 2p saving per item and there’s nothing wrong with that; I do it all the time.

Our parents teach us to be frugal with money in our up bringing and we sometimes become animals of habit throughout our lives. Through the generations, inflation has seen prices increase ten fold and who would have thought years ago that the price of a loaf would touch the £1 figure.

The same can be said about UK property, as the housing market has exploded and the average mortgage has gone way above the £100,000 figure. This is before we align our currency and interest rate with the euro. Ireland has seen a massive explosion in property prices in the post years of joining the euro and it is now an extremely expensive place to buy property.

By comparison the UK property market is still cheap and I dread to think what will happen to property prices when the UK eventually aligns itself with the euro and interest rates are reduced to 3.5%. Will we see the average UK mortgage at the £200,000 figure?

An Englishman’s house is his castle but for the average homeowner with the average mortgage that is now in excess of the £100,000 it is an extremely expensive commodity. Many people do not realise that it could pay them to review and move their mortgages by remortgaging on a regular basis and the simple arithmetical advantages of this could be in the thousands as a consequence.

Consider this as a normal mathematical comparison. A 2% saving on a £100,000 mortgage works out at £2,000 per year and assuming that this saving can be made every year by moving the mortgage to another lender, it equates to an astronomical £50,000 saving over the normal mortgage term of 25 years. It just doesn’t make sense to be putting £40 a week into a lenders pockets when they already make billions of £££’s net profit per year.

Most of us have all experienced hard times at some stage in our lives and received letters from banks telling us that they are going to charge us £27 for bouncing a cheque or non payment of a direct debit or standing order. Now is the time to hit back and take some of that money back from them by taking advantage of the discounts that they have to offer to borrowers. So, if there is massive saving around like that, why do people not remortgage more often?

Surveys conducted by lenders have identified that some people are just not aware, whilst others have said that they just could not be bothered. Some people have stated that the mortgage market is just too complicated.

Well, the range of UK mortgages has increased dramatically over the past few years and although this increase in mortgage types has added complexity, it has also introduced fierce competition, which has in turn resulted in the availability of some very attractive remortgage products for the customer. With over 10,000 mortgage products to choose from, how do we ensure that we get the best mortgage and remortgage rates?

Employing the services of a whole of market remortgage broker can pay dividends here as they have sophisticated computer software to narrow down the mortgage products and arrange the cheapest remortgage rates. But it is not just as easy as that! You need to be aware that there are different types of mortgage brokers in the UK.

  • There are those that select from a panel of lenders
  • There are those that select from the entire market
  • There are brokers that charge a fee
  • There are brokers that don’t charge a fee (take care)

All professional people need to be paid somehow for their services and the remortgage broker is no different. The key to employing the remortgage broker is to ensure that you are getting the best remortgage at that time and the only way to do this is to employ him and pay him for that service. By doing this you should ensure that there is no influence exerted by the mortgage lender offering him a large procuration fee, as it is known in the industry.

We continuously trust tradesman such as joiners, electricians, plumbers (if you can get them) to work for us when we need them and are happy to pay their fee when the job is finished, so why should that be any different when you employ the mortgage broker, when considering remortgaging or moving your mortgage to another lender.

About the author
Joe Kocsis is the Managing Director of a UK whole of market brokerage and has over 20 years of experience in the Financial Services Industry. Follow this link Remortgages for further information.