Save £2,000 this year on your mortgage
Are you paying too much for your mortgage? If you are one of the many in the UK who are overpaying then switching to a better deal could save you thousands of pounds.
This remains the single simplest way to improve your family finances. I keep writing about it because we keep hearing from people who have saved money this way and I know there are lots more who could also benefit.
I explained recently how mortgage lenders exploit borrowers> through the use of Standard Variable Rates, which they can change to suit themselves. But there are scores of mortgage lenders offering literally hundreds of different mortgage deals at lower rates.
Hundreds of thousands of people are paying too much
The bottom line is that hundreds of thousands of people could easily save 2% a year on their mortgages - £2,000 a year on a £100,000 mortgage. And that understates the value of the saving since you pay mortgage interest out of your net income. As a standard rate taxpayer, you'd need a pay rise of nearly £3,000 a year to equal the net benefit of saving £2,000 on your mortgage outgoings.
Many people are put off the idea of switching mortgages because it seems complicated. Well, selecting the best mortgage deal certainly isn't easy. Our Best Buy mortgage tables only give brief summaries of the offers available, and things like lending and valuation criteria vary widely. So either you need to devote quite a bit of time to your own research, or use a reputable mortgage broker.
I recommend the mortgage broker route for several reasons:
#1: Brokers get to hear about many deals that are never offered publicly
#2: Brokers know about the different lenders and can steer you towards the best for you
#3: They can advise you on all the steps of the process and help you with the paperwork
That said, I do not think many people need the services of a mortgage broker who charges a fee. Most brokers get 'procuration fees' from lenders, typically 0.25% to 0.5% of the loan. This is sufficient to cover the provision of an advisory service for the vast majority of straightforward lending cases.
But I also think you should avoid brokers who do not have access to the whole lending market - and there are many small local brokers who are effectively tied to a small panel of lenders. A 'whole of market' broker in contrast has access to the vast majority of available loans. So the 'no fee, whole of market' broker is in my view the right service for most borrowers looking for a better deal.
Use a no-fee broker to get the best deal
We always recommend that you use a no-fee 'whole of market' mortgage broker like London & Country (L&C). L&C have provided switching advice to hundreds of our users. Here is just one recent example:
Vicky and Stuart Thom recently switched from a high street mortgage with HSBC to a fixed rate mortgage for £58,000 with Cheltenham & Gloucester charging 5.29% recommended by mortgage brokers L&C.
Says Victoria: "We chose L&C as they were advertised on a reputable website and since we were first time buyers now looking for a better mortgage deal, our experiences are a somewhat limited!
L&C were absolutely brilliant in giving straightforward advice and ensured that I understood each step involved in the process. My husband and myself are delighted to have arranged a new mortgage that will save us money and have found the best possible deal for us first time thanks to the brilliant staff at L&C."
