Martin Lewis warns homeowners to check mortgage deals NOW as rates drop to lowest on record
MARTIN Lewis urged homeowners to check their mortgage agreements immediately, as rates have fallen to record highs.
Mortgage holders could save thousands of dollars by switching offers, but be sure to check out these top tips before you move.
Why have mortgage rates gone down?
Two-year fixed rate mortgages have fallen to 0.95% and five-year fixed rates to 1.17% – though homeowners should be careful with the fees.
Lenders compete with each other to give the best clients the best deals, Martin said in his latest MoneySavingExpert weekly newsletter.
This is due to low interest rates in the UK, an active housing market and banks with money to lend, as many consumers have accumulated savings during the pandemic.
However, new economic data released today has shown that low interest rates may be short-lived.
The best mortgage deals available now
WITH mortgage rates at an all time high, now is the time to take a look at your transaction to see if you could save some money …
These are the best rates currently available at each level of loan to value, according to Money.co.uk.
Remember that you should do your own research before switching offers and always factor in the additional charges.
- LTV 95% – Darlington Building Society 5 years fixed
Maximum LTV: 95%
Initial rate: 2.99% fixed until July 31, 2026
Subsequent rate (SVR): 5.3% variable
Overall cost for comparison: 4.3% APR
(Monmouthshire Building Society and Virgin Money offer an interest rate of less than 95%, but only to existing borrowers)
- LTV 90% – Vernon 2 years discount Maximum LTV: 90%
Initial rate: 2.35% for 2 years (2.85% discount on the SVR)
Subsequent rate (SVR): 5.2% variable
Overall cost for comparison: 4.9% APR
- LTV 80% – Furness Building Society 2 years discount
Maximum LTV: 80%
Initial rate: 1.49% for 2 years (3.65% discount on SVR)
Subsequent rate (SVR): 5.14% variable
Overall cost for comparison: 4.6% APR
(Leek United offers an interest rate of less than 80%, but only to existing borrowers)
- LTB 50% – The Cumberland 2 Year Fixed Rate Mortgage
Maximum LTV: 60% (The lowest LTV requirement is usually 60%, so the answer to the 50% question will be the same as up to 60%)
Initial rate: 0.98% fixed until 01 Jul 2023
Subsequent rate (SVR): 4.09% variable
Overall cost for comparison: 3.8% APR
- LTV 95% – Monmouthshire Building Society 2 year discount for existing borrowers
Maximum LTV: 95%
Initial rate: 2.59% for 2 years (2.15% discount on the SVR)
Subsequent rate (SVR): 4.74% variable
Overall cost for comparison: 4.5% APR
This product is only available for product transfers with your existing lender and not available for the purchase of a new home.
- Leek United 2 year discount for existing borrowers
Maximum LTV: 80%
Initial rate: 1.29% for 2 years (3.9% discount on the SVR)
Subsequent rate (SVR): 5.19% variable
Overall cost for comparison: 4.5% APR
Available only to existing borrowers who are not moving.
UK inflation hit 2.1% in May amid rising fuel prices for clothing and restaurants, raising fears of interest rate hikes.
Experts have warned that this unexpected rebound could be a sign of the market overheating and weigh on household finances.
The Bank of England could now raise the key rate much higher than expected.
This would cause lenders to raise interest rates on things like personal loans and mortgages.
How to find the best deal
The mortgage offer you are offered will depend on several factors, including the amount of your deposit, the amount you wish to borrow and your credit score.
First, you need to check your current offer and contact your lender to see if you can upgrade to a better deal without going through another company.
Alternatively, you can use a online mortgage comparator to see if you could save money by switching.
Your loan to value (LTV) is the most important factor that will affect the mortgage rates you pay.
How do you find the best mortgage deals?
WE explain how to make sure you get the best deal on your mortgage or mortgage:
Websites like MoneySuperMarket and Moneyfacts have sections on mortgages so you can compare costs. All banks and mortgage companies will also have their offers available on their sites.
If you are confused by all the offers on the market, it may be worth talking to a mortgage broker, who will help you find the best mortgage for you.
A broker typically costs between £ 300-400, but could help save you thousands of dollars over your mortgage.
You will also need to decide whether you want a fixed deal where the interest you are charged is the same for the term of the arrangement or a variable mortgage, where the amount you pay can change based on the bank’s base rate. from England. .
Remember, you’ll also need to meet the lender’s strict eligibility criteria, which will include affordability checks and review of your credit report.
You may also need to provide documents such as utility bills, proof of benefits, your payslips for the past three months, passports, and a bank statement.
LTV stands for the ratio of your mortgage to the value of your property.
For example, if you have a deposit of £ 10,000 and are considering a home of £ 100,000, you will need a 90% LTV mortgage.
Mortgages start at 95% LTV, but you can get better deals at lower LTVs.
Martin said, “It’s always usually a lot cheaper at 90%, again at 80%, 75%, and then bottom out at 60% of a home’s value. There may also be minor gains every 5% in between. “
Be aware that there are other costs to consider during the transition, such as additional fees to complete the transaction.
The fees are generally higher for lower rate mortgages.
Also, keep in mind that if you’re currently stuck in a mortgage deal, you may need to make an early exit payment before you can switch.
Lenders will consider two key criteria before allowing you to remortgage.
First, they will check your credit history. If it’s bad, they may block your request or exclude you from the cheapest deals.
You can check your creditworthiness online – and there are ways to improve your score.
Mortgage providers will also check to see if you will be able to meet your repayments – at current rates and also if they are skyrocketing.
They will check your income, bills and expenses to prove that you will stick to your payments.
If you have accumulated savings during the pandemic, Martin Lewis recommended using the money now, so you need to borrow less for your mortgage.
James Andrews, Personal Finance Editor at argent.co.uk said, “Getting the cheapest mortgage for your deposit isn’t just about the rate.
“You also have to think about the costs. This is especially true for shorter offers.
“On a two-year mortgage contract, for example, you might find that it’s cheaper to take a higher rate with a lower fee than to just ask for the one with the lower APR.
“On the other hand, getting a Lifetime Follow-Up Agreement can save you thousands in fees over the life of your mortgage because you only need to apply once.
“It’s also remarkable how much cheaper mortgages get when you cross one of the LTV thresholds – which means if you’re close to a limit and are able to save a little more before you apply or negotiate a little lower than the asking price, you can realize substantial savings throughout the loan. “
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