As the Bank of England's interest rate decisions continue to make headlines, thousands of homeowners across the UK could be missing out on significant savings by sticking with their current mortgage deals. With rates showing signs of stabilisation after recent volatility, there's never been a better time to hunt for a better deal.
Why Your Current Deal Could Be Costing You Thousands
Many borrowers automatically roll onto their lender's standard variable rate (SVR) when their fixed term ends, often paying hundreds of pounds more each month than necessary. With the average SVR sitting around 7-8%, compared to fixed rates starting from 4.5%, the savings potential is enormous.
Five Steps to Mortgage Savings Success
- Start Early - Don't Wait Until the Last Minute
Most lenders allow you to secure a new deal up to six months before your current term ends. This gives you plenty of time to shop around without pressure. - Look Beyond the Headline Rate
That super-low interest rate might come with hefty arrangement fees that wipe out any savings. Always calculate the true cost including all charges. - Use Comparison Tools Wisely
Websites like Moneyfacts, Compare the Market and Uswitch provide excellent starting points, but remember that not all deals appear on comparison sites. - Consider Speaking to a Broker
Mortgage brokers have access to exclusive deals and can navigate complex lending criteria that might stump the average borrower. - Check Your Credit Score First
A single black mark on your credit file could scupper your application or push up the rates you're offered.
Fixed vs Tracker: Which Way to Go?
With economists predicting potential rate cuts later in 2024, many borrowers face the classic dilemma: lock in security with a fixed deal or gamble on savings with a tracker?
Fixed-rate mortgages offer peace of mind with predictable monthly payments, perfect for budget-conscious homeowners. Meanwhile, tracker mortgages follow the Bank of England base rate, potentially saving money if rates fall but exposing you to increases.
The Hidden Costs That Could Derail Your Savings
- Early repayment charges: Check if you'll face penalties for leaving your current deal early
- Valuation fees: Some lenders charge hundreds for mandatory property valuations
- Legal fees: Factor in conveyancing costs when switching lenders
- Higher lending charge: Applies if you have a small deposit or equity
Don't Forget Existing Customer Deals
Many lenders reserve their best rates for new customers, but it's always worth checking what your current provider can offer. Sometimes the loyalty penalty is real, but other times they might surprise you with a competitive deal to keep your business.
The mortgage market remains highly competitive, with lenders constantly tweaking their offerings. By doing your homework and acting proactively, you could save thousands over the term of your loan. Remember, the difference between the best and average mortgage deals could mean an extra holiday each year or significant overpayments to clear your debt faster.
