Are you still paying too much for your mortgage?
Only one in 20 borrowers have switched lenders to take advantage of better deals elsewhere. Clifford German explains how it is done
Wednesday 17 July 1996
In spite of all the publicity about the mortgage war, an NOP poll reveals today that inertia and ignorance still rule. Although more than 75 per cent of mortgage holders have thought about remortgaging their existing property with a different lender, only 5 per cent have done so.
Some thought the costs of remortgaging, including getting a new solicitor and a new property survey, would outweigh the savings. Others were afraid of making the wrong decision. Others again simply could not see the advantage. But the biggest single reason, according to the poll, is the mistaken belief that people only remortgage to pay off debts or raise more capital to spend on something else, whereas the real reason is to save money.
In fact, as most readers of this newspaper will know, mortgage lenders have been offering special deals not just to first-time buyers and to people moving home, but increasingly to customers of other lenders who have no intention of moving home but can be tempted to pay off their loan and remortgage with a different lender offering a better deal. For the past two years, most lenders have been offering discounts of up to 6 per cent off the standard variable rate of interest spread over one, two or three years.
Some packages offer up-front cash rebates of up to pounds 6,000 to tempt borrowers to switch, plus cash to cover the legal costs of hiring the solicitor to arrange the redemption of the old mortgage and the setting up of the new one, as well as the costs of getting a new survey on the property and a new search of local authority records to check that the borrower has legal title to the property. Other packages consist of tempting low fixed-rate deals at less than the present standard variable rates. The permutations are endless in an attempt to steal business in a static mortgage market.
Most deals require that borrowers take out the new mortgage for at least five years, and impose a penalty on borrowers who take the special deal and then want to redeem the loan for up to two years after the special rate has come to an end. Some add back up to 0.25 per cent to the rate if borrowers do not take out buildings and contents insurance with the lender's tame insurance company. Most prefer to lend only 75 to 90 per cent of the property valuation. But they still add up to an attractive deal.
So why the modest take-up? One problem has been the cost of advertising. Some of the best offers have come from smaller mutual societies, such the Yorkshire, the Coventry and the Northern Rock before it decided to become a bank. But by definition they have relied heavily on the media to promote their wares (Independent readers should consult the table of best borrowing rates in Saturday's Weekend section). Mortgage brokers such as John Charcol will track down the best deals, although they will probably want a fee of pounds 200 to pounds 300 to do so, while Bath-based London & Country Mortgages charge no fee but will hope to earn commission by providing an endowment or insurance policies.
Today, Mortgage Intelligence, which claims to be the largest network of specialist mortgage brokers, has linked up with a number of lenders to create a range of exclusive mortgage products. They include a 5 per cent discount from the Lambeth Building Society and the Scottish Building Society, to be taken over five years to suit the borrower, eg a 3 per cent cashback and a 1 per cent discount for two years, or a 1 per cent cashback and a 1 per cent discount for four years; or a 3 per cent discount for a year plus a 1.5 per cent cashback, worth an estimated pounds 170 a month gross on a pounds 68,000 mortgage from Bristol & West Remortgage; or a 2 per cent discount for 18 months plus a pounds 400 cashback and pounds 315 towards legal fees and a free valuation from Bank of Ireland Remortgage. Fixed rate deals are also available. Brokers fees may be payable, but Mortgage Intelligence also promises to create new products every month. Call 0800-246000 24 hours a day for details.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Scottish independence live: Scotland gives a clear 'No' in historic referendum - as it happened
- 3 iOS 8 is full of shiny new features - but it's terrible news for app developers
- 4 Friends 20th anniversary: Six things we wouldn't have without influential comedy series
- 5 Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Day In a Page
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000