How do I know if my mortgage rate is too high?
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andrea65
1 year ago
Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
You mortgage rate is 'too high' if it is possible to obtain a similar mortgage at a lower rate elsewhere.
But if you are locked in to a higher rate than elsewhere, because you are benefiting (or perhaps, in this case, suffering from) a special deal such as a discounted product or a fixed rate product, then there may be nothing you can realistically do about it because of redemption charges and penalties.
To get the full answer, first of all check with your current lender whether there are any redemption penalties, and also ask them whether they have any alternative products that you could transfer into. Note down the total cost of any redemption or remortgage with them, remembering that you will not only have any penalties to pay, but you will also have some form of final fee to meet as well.
Armed with that data go to an independent financial adviser or an independent mortgage broker, and ask if they can do any better for you, bearing in mind the fact that you will have to meet some or all of survey fees, mortgage fees and legal fees (which can mount up to some thousands of pounds) - some brokers also will charge a separate fee, so check this out.
Please let the broker know of the current situation and what your own lender could do for you - this will make the process more efficient for everybody. I should mention that in my own experience your existing lender is likely to give you the best deal, because the total fees due would be very much smaller - but you never know, and a good broker might suggest a strategy that could suit you better, such as perhaps a lifetime rate or an offset product.
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But if you are locked in to a higher rate than elsewhere, because you are benefiting (or perhaps, in this case, suffering from) a special deal such as a discounted product or a fixed rate product, then there may be nothing you can realistically do about it because of redemption charges and penalties.
To get the full answer, first of all check with your current lender whether there are any redemption penalties, and also ask them whether they have any alternative products that you could transfer into. Note down the total cost of any redemption or remortgage with them, remembering that you will not only have any penalties to pay, but you will also have some form of final fee to meet as well.
Armed with that data go to an independent financial adviser or an independent mortgage broker, and ask if they can do any better for you, bearing in mind the fact that you will have to meet some or all of survey fees, mortgage fees and legal fees (which can mount up to some thousands of pounds) - some brokers also will charge a separate fee, so check this out.
Please let the broker know of the current situation and what your own lender could do for you - this will make the process more efficient for everybody. I should mention that in my own experience your existing lender is likely to give you the best deal, because the total fees due would be very much smaller - but you never know, and a good broker might suggest a strategy that could suit you better, such as perhaps a lifetime rate or an offset product.
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
An important thing to also bear in mind when comparing is that you also need to compare against people of similar circumstances. for example a first time buyer with a 15% deposit would probably get a better deal than a seasoned borrower age 60 looking for a 10 year mortage having just turned self employed with no accounts.
its not always a case of just looking at loan as a % of value. lenders are more choosy now and will decline based on your repayment method, your occupation, employed/self employed status. age of your home (some lenders dislike new builds).
all of these (and other) factors will determine your starting rate before filtering away deals based on your creditworthiness.
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its not always a case of just looking at loan as a % of value. lenders are more choosy now and will decline based on your repayment method, your occupation, employed/self employed status. age of your home (some lenders dislike new builds).
all of these (and other) factors will determine your starting rate before filtering away deals based on your creditworthiness.
