So, your current mortgage deal is coming to an end and the big question is whether you should stay with your current lender or move to a new one. What to do?
Forty years ago, it was probably common for people to spend their whole life with the same bank, mortgage lender, power supplier and insurance provider – and we were rewarded for doing so, sometimes through financial incentive or maybe the personal relationships that equated to better customer service.
The consumer landscape is very different now than it was a generation ago. Part of the reason is that denationalisation opened up markets that had previously been state-run monopolies, spawning more competitive markets.
As a result, we now tend to live in a ‘switch society’ where the benefits of our consumer activity are often to be found in shopping around for a better deal elsewhere.
The same is true of the mortgage market. Loyalty is all very well and good, but relatively recent research from Citizens Advice shows that sticking with your lender when your mortgage deal comes to an end can actually cost you money.
On average, the report says, the average cost of doing nothing at the end of your existing mortgage arrangement – what’s known as the mortgage loyalty penalty – is £439. For 10% of borrowers, it’s £1,000 or more.
The best advice, always, is to shop around at the end of your deal to see what other lenders are offering. One of the benefits of a more competitive market is that it’s highly incentivised, so there are always deals to be had – the question is whether they’re right for your specific needs not just now, but in the future as well. When it comes to the question of whether or not to switch lenders, there are a lot of things to consider. Here are just a few.
The potential benefits of staying with your current lender
One key attraction to sticking with your current lender is that as long as you’re not increasing your borrowing, you’ll avoid paying out any fees that might be associated with moving to a new deal elsewhere. Typically, fees might include solicitors’ conveyancing costs, new lender arrangement fees and possibly exit fees charged by your current lender.
Remortgaging through what’s known as a product transfer means minimum fuss and stress, and no financial outlay. That can be appealing in the short term, but switching to a new lender could save you money over the lifetime of the loan or any fixed deal – so if you don’t get advice from a mortgage broker like Oportfolio, we’d always recommend you do your research on total costs.
Naturally, staying put also saves you time. Moving to a new lender who doesn’t know you will entail credit checks, paperwork, conveyancing and affordability checks – and that all takes time to pull together. By contrast, a straightforward product transfer with your existing lender can often be done quickly.
That said, the issue of what you’ll pay over the lifetime of a deal may well be different if you spent the time going through the process of switching lender, so research here is key. The problem is that as the Citizens Advice research included earlier suggest, close to 40% of people say they simply don’t have the time to shop around.
That’s where it can pay to work with a professional mortgage expert like Oportfolio who’ll do the groundwork for you and handle the application process on your behalf if you choose to switch.
The potential benefits of switching
The biggest potential advantage to moving your mortgage to a new lender – or at least taking the time to shop around – is that you’ll have access to some of the best deals available. And if you work with Oportfolio, you’ll also often be able to access products you won’t be able to find yourself, because they’re not available online or on the High Street.
From 2-year and 5-year (and, occasionally, 7 and 10-year) fixed term deals, to tracker rates and fixed interest products, there’s a lot out there to choose from. Over the lifetime of your mortgage, you may see significant savings when compared to the deal you’re currently on – so it’s definitely worth doing the sums to find out just what the benefits might be.
At Oportfolio, we’ll do all the calculations for you and then sit down with you and talk you through the options, so you get the product that suits your needs.
And with competition in the mortgage market still high, there are all sorts of incentives out there to tempt you across to a new lender. From the waiver of legal and arrangement fees to cashback offers, there are a lot of golden hellos to catch the eye – but you need to be careful: the rates associated with these products may be higher than a standard product without the attractive bells and whistles, so be sure to check the costs.
The watchword here is research. Whether you think you want to stay with your current lender or you’re leaning towards moving away, it’s really important to do some research and work out the long-term benefits of the products you’re considering.
A professional mortgage broker can do this for you, and at Oportfolio our aim is to take away the stress of the application process (although you’ll still need to put in the time to gather all the information that might be needed).
If you’re ready for a new mortgage, we’re ready to help you get it.
To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.