Key facts:
- Clients were contacted by Oportfolio 6 months before their fixed rate deal was due to end
- They had been enjoying a fixed rate mortgage for 2 years and had completely forgotten that their rate was due to expire
- If they hadn’t been contacted, they would have fallen on to the lender’s standard variable rate which would have cost them thousands of pounds extra a year.
Our clients:
These mortgage borrowers had been working with Oportfolio for several years and our advisors had helped them with purchases, remortgages, and insurance policies many times over these years. Since the business relationship started, mortgage rates have been fairly low and the risk of rates increasing was not something that the clients were concerned about. In their last mortgage review, we helped them to secure a fixed rate deal for 2 years at a rate of 2.99%.
So, for a year and a half, the clients paid a very manageable and very competitive monthly mortgage payment for a year and a half without even considering any changes could happen to their mortgage. Then the economic crisis kicked off and mortgage interest rates started to increase up and up. Rates increased on a daily basis for some lenders and the average mortgage interest rate was soon 5%. Now a lot of people who are on 2 or 5 year fixed rates that still have 6 months remaining would think that the best option would be to make the most of the fixed rate for the last 6 months and then look to remortgage afterwards, and some advisors would say the same. But that is not the case.
How did we help?
At Oportfolio, we contact all of our clients 6 months prior to their fixed product expiring so that we can make sure that we are ahead of the game. Calling our clients 6 months ahead has historically given us more time to carefully consider the client’s current mortgage status, what they are looking to do in the future, and to find them the best possible rate for their circumstance. Now that rates are changing regularly, it is more important than ever to start looking at securing a new deal.
We called our clients and made them aware that their rate was coming to an end in 6 months. They agreed for our advisor to do some research for them and find a new fixed deal. Our advisor Jade immediately jumped onto our lender database and began to search for the best deal, before rates rose again. Jade found a competitive rate on the market and secured the loan for the client. The mortgage was offered at a rate of 4.15% fixed for 2 years, costing them £1,921 a month.
If they had waited for 2 weeks, the rate would have been 5% costing them £2,137 a month and if they waited for another 2 weeks it would have been 5.5% costing them £2,268. If they had not done anything and fallen onto the lender’s SVR at 5.74%, they would have paid £2,333 a month. So, by taking action quickly, we saved the clients a potential £9,888 over the two years!
In another year and a half, we will contact the clients again when rates will have hopefully gone back down, and we can help them to secure a new lower and more competitive rate. Saving them even more money over the next two years.
What was the rate?
The loan was secured on a capital repayment and interest fixed rate for 2-years at 4.15%. After the fixed period, they would revert to the bank’s 5.74% standard variable rate at which time we will contact the clients to discuss remortgaging on to another new competitive fixed rate. The mortgage term was 33 years.
If you or anyone you know is coming to the end of their fixed mortgage deal, please feel free to give our advisors a call today to see how we can help. You don’t need to already be a client of ours. We are happy to help anyone who needs a hand.
