MSE founder Martin Lewis said mortgage costs are steadily rising but taking action can help find the best deal for you – with a homeowner saving £2,100 a year
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One lucky homeowner managed to save £2,100 a year by following the mortgage advice of Martin Lewis’ MoneySavingExpert.
The mortgage tip is more important than ever as mortgage rates slowly rise.
The Bank of England (BoE) raised interest rates for the fifth time in a row last week.
This interest rate is built into the mortgage cost.
Those who have a tracker rate or Standard Adjustable Rate (SVR) mortgage will see their interest rates rise automatically in line with BoE rate hikes.
Existing fixed price offers are not affected by base price changes, but new fixed price offers are.
However, lenders have been slowly making cheap deals in recent months in anticipation of further rate hikes.
The newest MoneySavingExpert email said those getting tracker or SVR home loans “will soon see a cost increase of around £12/month for every £100,000 of mortgage debt”.
It added that “Today’s cheapest fixes are three times what they were last October”.
However, one MoneySavingExpert reader said he managed to save £2,100 a year by taking out a deal with his existing lender.
Rescheduling debt with your current lender is called a product transfer.
These deals can be cheaper than a remortgage loan with a new lender — although they may not be.
But a product transfer often means removing rigorous affordability tests that have been applied to new mortgages.
The reader said: “I have just signed a new contract with my existing provider at the end of a five year term and have been able to save £175/month [£2,100/year] – same conditions. I used those Mortgage Tool on MSE.”
Martin Lewis had a list of quick tips for homeowners trying to find the best home loan deal for them:
Ask what your current lender is offering
Lewis said: “[Product transfers] used to not be a good option, but these days it can work well as your existing lender will waive affordability checks if you stop borrowing. Also, there will likely be less paperwork and lower fees.”
Compare the best offers
Lewis told the MoneySavingExpert Mortgage Best Buys comparison helps to display the best deals on the market.
One reader said: “We rescheduled in April and our monthly payment has gone from £900 to £750. Was our first debt restructuring when we bought our first house two years ago.”
Compare offers with your current offer
Online mortgage calculators can help you figure out what your repayments will be on different types of mortgages.
Use a mortgage broker to make things easier
Lewis said: “Lenders are conducting both credit and affordability checks (which are now likely harder for some to pass due to the rising cost of living) which can kibosh applications. It’s hard to know who will accept you and how much it will cost you to borrow.”
“Find a good mortgage broker and they’ll give you information that’s very difficult to get yourself.”
Many mortgage brokers also gain access to secret deals that you can’t get yourself by going direct to lenders, and fight with you when a lender has trouble.
https://www.mirror.co.uk/money/martin-lewis-fan-explains-how-27307862 Martin Lewis fan explains how they saved £2,100 on their mortgage with a simple check