Now is the time to review your mortgage
It will not have escaped your notice but interest rates changed a few weeks back and went up for the first time in many years. Our letter from First Direct arrived in the post recently to let us know that our variable rate mortgage was increasing from £1000 per month to £1035 per month. Gutting.
We only recently changed our mortgage. We have always had a fixed mortgage but intending on moving to a new house so needed to switch to a variable rate mortgage to ensure there were no penalties when moving or changing mortgage. Our situation has now changed and we are not moving to a new house, so now is the time think about fixing our mortgage to protect ourselves from any further rate rises.
I am no fortune teller but I really feel like I need to protect our mortgage payments and not be in a position of fear of increased costs every time the interest rates rise. Who knows if they are going to rise more but they might. And the fact they have gone up once could indicate that they will again.
If you are on a variable rate mortgage or are on a standard variable rate (i.e. with no deal from your lender) then you will be in the same position. You mortgage will increase by around £15-20 per month for every 100k you owe for every 0.25% interest rate rise.
A new Online Mortgage Broker
Changing mortgage is often seen as the most time-consuming household finance job. I know I have done it many times in my life. I never feel like I have ever got it quite right with choosing fixed or variable rate mortgages. When interest rates were falling I always had a fixed mortgage and now when they might be rising I have a variable rate mortgage!
I have discovered a great new online mortgage broker, Habito who makes the mortgage process much simpler. Whether you are re-mortgaging or getting a new mortgage the first thing you do is type in a few details on their website.
I have gone through the re-mortgage route. They take a few details taking around five minutes with no credit checks to give you indication of what lending you can expect. And its free!
Firstly answer a few questions, new mortgage or re-mortgage. Is the property owned or buy to let? You enter the current value of your home and current outstanding mortgage balance, monthly repayments, years left on the mortgage. All standard questions but you might need to dig out your mortgage documents for. You need to enter the current end date of your existing deal.
Are you applying by yourself or with someone else? You next need to enter your combined earnings. You will also need to include your other outstand debts, any loans or credit card balances. And you need to declare any CCJ’s, IVA’s or bankruptcy.
You then need to select the type of mortgage you might be interested in. Fixed or variable and over what number of years. Also, if you want interest only or repayment. I went for a 5-year fixed mortgage with capital repayment as I want our mortgage balance to be reducing over time.
Questions are over!
That is it. Really not many questions to ask. Habito then scan the market and check your eligibility. I was most surprised to see that we can move to a different lender and that our earnings are enough to cover the outstanding mortgage amount that we need. We owe £211k on our mortgage still. There is a 1.79% fixed mortgage deal available for 5 years with Coventry building society.
The next stage of the process is to sign up to Habito account and you can progress with the mortgage application. Habito is an independent mortgage broker and you will not be charged a fee by them, they earn a commission from the lender once the application is complete.
I am really impressed with their online service, it’s so simple to complete and it looks like we can move to a different lender and save some money. Why not give Habito a go yourself and see if you can save money on your monthly bills?
The next stage for me now I have set up an account is a detailed mortgage illustration, then speak to an advisor to ensure the mortgage is the best fit for future plans. They then arrange for the mortgage in principle and follow everything through to completion of the mortgage from one lender to another. Gone are the days of needing to make an appointment for a mortgage advisor to come over to your house!
This is a collaborative post.