- February 23, 2021
- Phil Wells
There are many myths when it comes to mortgages, and some of these myths are costing homeowners thousands of pounds extra per year.
What is current interest rate and term left on my Mortgage?
Research has found that many people do not know what their current interest rate is, or when their current deal expires.
It is important to know when your current deal expires, as when your deal expires you will be switched onto the mortgage providers Standard Variable Rate (SVR). It has been found that on average the SVR is 2% more then the current fix rate available.
You can start looking at re-mortgaging six months before your current deal expires and what is available. It is worth approaching your current provider to find out what deals will be on offer to you. Your current provider is likely to leave it closer to the expiration date.
I will clear my mortgage quicker on an SVR mortgage
Many homeowners believe that moving onto a SVR mortgage they will pay their mortgage off quicker, compared to being on a fixed rate mortgage. This is not the case; in fact, you are paying more interest. The only way you can reduce your mortgage term is by overpaying on your monthly mortgage payments, as there are usually no penalties on a SVR mortgage.
Will a Re-mortgage mean I have a second loan on my property?
No, by re-mortgaging it does not mean you are taking on an extra loan.
A re-mortgage means you are moving your existing mortgage deal to another mortgage deal. You can do this for a like for like switch or increase the amount that you borrow because you want to complete some home improvements on your properties.
I should choose a mortgage with the lowest interest rate.
When choosing a mortgage, we normally look at the rates being offered by the mortgage providers and go for the lowest one. This does not mean we are getting the best rate.
It is worth looking at the small print and finding out if there are any additional charges for that product. For example, one provider might be offering 1.5% fixed for 2 years, but have additional signing on fee for the product, while another provider is offering 2% with no fee.