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Why are you paying the Standard Variable Rate on your mortgage?

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When you initially take out a mortgage, you are likely to be offered a low rate as an incentive to take out a mortgage with that bank or building society. These incentive rates are over 2 or 5 years. So, what happens at the end of the low rate? If you are not careful it will revert to the lenders standard variable rate which can be very costly to you.

There are not many situations in which it makes financial sense for you to be paying the standard variable rate on your mortgage. The standard variable rate is often far more expensive than any other mortgage interest rate your lender is offering. The good news is it is quite simple and quick to change to a lower rate and to save a considerable amount of money.

With over 14,000 mortgages available on the mortgage market there is a good chance you will be able to get a far lower interest rate than your existing lenders variable rate. If you want to know how to go about saving money by getting one of these then read on.

What are the chances of my existing lender having the very best rate?

With over 200 different banks and building societies offering mortgages in the UK, the chances that the lender you are with is offering the best interest rate are very slim!

What should I do first?

The first thing to do is to see what interest rates your existing bank or building society will offer you to stay with them. Make sure that you are aware of any charges or costs that are involved if you do decide to stay.

What is the next step?

Now you know what you can get with your existing lender you need to see what other banks and building societies will offer you to move over to them. Most lenders offer good incentives in the form of low interest rates and low costs and charges to gain you as a new customer.

How do I start to compare over 14,000 different mortgages?

Get yourself a whole-of-market mortgage adviser who will have access to all the available mortgages offered by every bank and building society. The mortgage adviser will search the whole market to compare the best rates and incentives being offered. They will be able to find the number one deal for you.

Will a mortgage adviser charge me for their services?

It’s true that a lot of mortgage advisers charge you for their services however there is such a thing as a NO FEE mortgage adviser.

How do I find a NO FEE mortgage adviser?

Ask your family or friends if they have recently remortgaged and if they used a mortgage adviser. Another alternative is to carry out a Google search. Search for NO FEE MORTGAGE adviser. Once you have a list of local companies, try to find one that you feel you would like to work with. Have a look at their website. Have a look at their Facebook and Instagram pages. Do they have lots of 5-star Facebook and Google reviews? Do they have lots of very happy clients?

What else can I expect a mortgage adviser to do?

Firstly, a mortgage adviser will search the whole market to find you the best rates and deals but this is only the start of what they will do for you. They will get the mortgage application submitted to the lender and talk to the lender every week as well as your conveyancer and existing lender. They will arrange for the valuation survey to be done and see the mortgage application through to the mortgage offer. Once the mortgage offer is received, they will see the mortgage through to completion.

What other fees might I need to pay?

These are some of the fees that you may need to pay when you remortgage –

  • Lenders arrangement fee
  • Valuation survey
  • Legal fees
  • Arrangement fees

Although these fees are very common, many lenders will offer these for FREE as an incentive to gain you as a new customer. Your mortgage adviser will be able to search for lenders offering free incentives to keep the cost of remortgaging as low as possible.

Is there anything positive about being on the lenders standard variable rate?

Yes, there is! It means you are free to either negotiate a new deal with your existing lender or that you can to move to a new lender that will offer a lower rate, without a fine from your existing lender for moving away from them.

How much money can I expect to save on a monthly basis?

This is a difficult question to answer as it depends on the size of your mortgage. The bigger the mortgage, the more you can save by remortgaging. It is not unusual to save £200 – £300 a month.

How long does it take to remortgage?

The average time to remortgage is two months. It therefore makes sense to get the remortgage underway before you are on the lenders standard variable rate. If you are already on the variable rate most mortgage advisers and conveyancers will work hard to reduce the amount of time to remortgage to a minimum. The prime time to start the remortgage is 4-6 months before your existing mortgage rate ends.

Should I fix my mortgage rate or choose a tracker rate?

The answer to this will depend on several factors with the main one being your attitude to risk. If the thought of interest rates rising worries you then it may be wise to fix your mortgage rate. Your mortgage adviser will be able to give you comparisons on fixed rates and tracker rates which may help you make a decision.

My income has changed and now I am on the variable rate

This doesn’t necessarily mean that you need to be on the variable rate. This could be costing you a lot on a monthly basis. Find a mortgage adviser who will have access to every bank and building society mortgage affordability calculator. Each lender has a different calculation on how much they will lend and it will definitely be worth investigating if another lender will lend you what you require based on your new income.

I have got into financial difficulties and now I am on the variable rate

Once again don’t assume that you have no options open to you. It will really depend on what financial difficulties you have. If it is down to a couple of late payments on your bills, then you will find that a lot more of the lenders will consider you now compared to a couple years ago.  Speak to a mortgage adviser who will be experienced at this. The mortgage adviser will understand all the different banks and building societies (there are over a hundred!) attitude to debt and late payments, therefore there is a good chance that you will fit one of these lenders criteria. Being on the variable rate is very expensive and may be pointless therefore you owe it to yourself to at least investigate if you have other options open to you.

Even if you do not fit any lenders criteria your existing lender may offer you a new rate. As long as you are not changing the term or the mortgage amount, they will not underwrite your mortgage and therefore there is a good chance that they will offer you a new fixed or discounted rate.

I only have a few years left on my mortgage

Even if this is the case, there is no reason why you should be on the variable rate. The fact that you only have a few years left until your mortgage is repaid probably means that your best option is to stay with your existing lender however still speak to your mortgage adviser. Your mortgage adviser will be able to see what other lenders will offer you compared to your existing lender.

Summary

So, we have concluded that there is only one person who will benefit from you being on a lenders standard variable rate and that is your existing lender. So find yourself a FEE FREE whole-of-market mortgage adviser and they will very quickly tell you if you will benefit from getting off the standard variable rate.

At YesCanDo Money we are a NO FEE mortgage broker and adviser. We are an independent family-run mortgage adviser based near Portsmouth. We have been established for over 30 years and always put our clients first. We don’t expect you to take our word for it, so take a look at our Facebook and Google reviews. We have an amazing team of very experienced mortgage managers who are at hand to help and assist you in any way they can so give us a call or message us and let’s start saving you money.

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Steve Roberts
Steve Roberts

Stephen Roberts MAQ is the founder of YesCanDo Money the Hampshire's largest no-fee mortgage brokers. With over 30 years of mortgage experience, he has advised and helped thousands of First-time buyers buy their first home and home movers buy their dream home. Speak to a mortgage expert today by completing our contact form:

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YesCanDo Money are a local Independent Mortgage Advisor based in Havant. We get to know you and your personal circumstances so that we can provide you with sound financial solutions for your mortgage, life cover wills and everything financial in between.

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