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Is Now The Moment To Change Mortgages, Or Would You Put Off?

smartiz | Jun 11, 2009 | 0 comments

Is now the right time to be thinking of remortgaging? If you have previously been on a bank’s mortgage deal that is now approaching or has reached the end of the grant period, then you would be thinking that it is high time to glimpse around the promote to se what other mortgage deals are presented to you. But is it the right thing to be doing, or should you just sit there and follow your bank’s variable rate mortgage?

Well, there’s no one solution for everyone in every circumstance. In truth, every person wishes to glance at their exact circumstances, se what is on impart and decide what is best for them. But there are one or two things to be on the watch for.

I was recently standing in the queue in the bank waiting to deposit a cheque into my account. The assistant was helping the client ahead of me. When the matter was done, the bank assistant asked the customer if they had anything else that they required. The customer replied that his mortgage was about to come to an end and what did he need to do to move to another fixed rate mortgage.

Well, the assistant’s answer surprised me. She told him that at that moment, the bank’s variable rate was lower than the fixed rate. Consequently, in the short term, it might be cheaper to take the variable rate and then transfer to the fixed rate when it looks like the interest rates might be going up.

The maths behind this is quite trouble-free and what should drive your own choice. By staying with the impart that is at hand and not moving, what will the monthly repayments be? Compare that to if you do move to another mortgage or even a alternative bank, what should your monthly outgoings be then?

Be very careful when doing this calculation to make sure that you do contrast like for like. Compare mortgage rates for mortgages that are similar. Don’t fall into the trap that a few lenders should set of building a mortgage glimpse cheaper as they are extending the repayment period by 5 or more years. Whilst over the repayment period of the current mortgage this should work out significantly cheaper, over the long term it may possibly end up costing you thousands more.

If the short term reduction of monthly payments appeals, then ask your current lender what they have on grant with regards extending the repayment period. And then compare all mortgage rates for the current mortgage against your projected mortgages. You possibly will then see which, over the long term, will cost you the least.

The other hurdle is the charges incurred to exchange mortgages. Don’t forget to contain them into your calculation. If all of this sounds too difficult – talk to an independent mortgage advisor.

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