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How Homeowners can avoid paying way over the odds for their mortgages once their fixed rates have expired.

Posted by Matt Munns on September 14, 2017
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For homeowners with a mortgage, loyalty isn’t worth it these days. This is due to the nature of Standard Variable Rates (SVRs), that tend to be a significantly higher rate than that of most introductory 2, 3 or 5 year fixed rates on mortgage products. This means that unfortunately, sticking with your mortgage lender could lead to more of a financial punishment for the borrower.

On the surface, this is a classic bait-and-switch that is often exploited by mortgage lenders, credit card lenders, and utilities companies: they’ll hook customers in with low-priced introductory offers, then after a set amount of time – usually 12-18 months – they’ll stick customers on ‘standard’ rates that are much more expensive.

Part of this problem lies with consumers. With so many mortgage lenders going after buyers for their business, it is difficult to wade through the huge amount of introductory offers that homebuyers receive – and to repeat this process every 2, 5 or 10 years is a nightmare for most due to the sheer complication of the mortgage market. Shopping around takes time and energy – a lot of borrowers simply don’t have time to search.

If you’re in this category of time-poor borrowers, don’t fret. You’re in a huge boat with thousands of others – and there are ways to beat the loyalty punishment.

Set reminders for yourself, and from your lender

Reminders, communication and checking the current market all help with potentially switching provider or haggling your rate. If you set an alarm or reminder to contact your lender three months before your introductory rate ends, this should give you enough time for your lender to help you. Conveyancing periods can last up to six weeks, which will seem like years when you’re overpaying on interest.

Try different methods of communication

Another way in which you can remind yourself of your upcoming switch will be letters. These may seem old fashioned, but a piece of paper could save you thousands of pounds. Simply contact your lender and ask for the reminder to be sent in the post. Remember: not all banks have standardised a method of communication yet. Some prefer paperless via texts and emails, but others continue to use older ways of contacting you.

Research like it’s your first mortgage every time your term’s up

One of the main issues that borrowers find with new mortgage rates is research. It’s a pain, it takes time, and mortgages are pretty time consuming affairs. If you keep on top of the market and thoroughly research the market in the months coming up to your preferential rate ending, you’ll find yourself in a great position to know which offers are out there, from which lenders, and which one suits you best for your current situation.

Remember: banks are in no way obliged to let you know if a deal is better than theirs. Financial regulation in the UK doesn’t stipulate this rule, so it’s unfortunately on to the consumers and borrowers to investigate their own mortgage rates. Talk to the experts to gather impartial advice.


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