Your Beginners Guide To Lowering Your Mortgage

A standard variable rate mortgage loan (which is SVR for short) is the standard borrowing rate offered by loan providers. It will most frequently reflect the Bank of England Base Rate, going up and down in sync with it. Mortgage providers. normally require 1% or 2% beyond the Base Rate as their SVR. This suggests that in the event the Base rate starts to go up so also will your mortgage rates, that's why it's called 'variable' as your repayments can vary.

A fixed mortgage implies the rate of interest on a mortgage won't vary for a specific time period. It provides the customer the peace of mind that their regular mortgage instalments will not go up and down before the end of that period of time permitting them budget their finances properly. When a fixed rate mortgage period of time is finished, the mortgage rate will revert back to a standard variable form.

A tie in period on a property mortgage means you are legally bound to the mortgage company for a set amount of time. How it works is that the mortgage company will present you with a special deal, like a fixed rate mortgage for two years. However, you might be connected to the mortgage company for a set term. following, for instance a year during which you will have to meet the standard variable rate. This is a means for mortgage companies to regain the funds they have 'lost' in furnishing you with such a good deal, for two years. In the event you plan to change mortgage companies in the midst of the 'tie in' agreement, they will charge you a financial penalty which may run in to thousands of pounds.

Many existing borrowers tend to put off remortgaging because they think the trouble generated by the procedure is just not worth while. Your existing lender should be approached and asked just what alternative offers are available. If you have doubts about the procedures and benefits about remortgaging, then it may be prudent to call on the expertise of an independent mortgage advisor - preferably one who is not tied to any one particular mortgage lender. The internet can also be a good place to start but make sure you read and understand all the small print and take professional advice before committing yourself to any deal.

If the mortgage you have at present has, for instance, a three year introductory discount and you are still within that three year period, you may have to pay an early redemption charge and it would be wise to check to see if after paying redemption charges, the new deal you are seeking is still worthwhile.

Amongst borrowers in the U.K. there is still a great deal of apathy from those who think it is just too much hassle to change their lender or type of mortgage. If the balance of your present mortgage is sufficiently low and you are receiving a loyalty rate from your lender,it could be that the monthly savings you generate means that it would be better not to change but keep to the deal you have at present.

It is a fact that rates, although low at the moment, are sure to rise in the future and the decision whether to remortgage or not comes down to one?s individual financial situation. Whatever you decide to do, shop around and do not make any commitment until you have exhausted all the various possibilities.

By: James Miller