Why you should consider swapping your mortgage deal

February 10, 2016 by Brendan O'Neill

Rates

Many people pay mortgage interest rates at the lender’s Standard Variable Rate, which could be costing thousands of pounds over the mortgage term. As the Bank of England base rate remains low, there are many deals being introduced onto the market, with incredibly low interest rates.

Although many people don’t review their mortgage, believing it to be complex or too time consuming, it should be reviewed each time the interest rate alters, annually if you aren’t tied into a deal, or when your existing deal comes to an end. Swapping to a low rate fixed deal for two or even five years will save you thousands of pounds. However, to increase those savings and pay off your mortgage much quicker, swap to a low rate deal but keep your monthly repayments at the same level as before, so that you are over paying.

There may be charges for swapping to a new deal, so take this into consideration before signing up to a new deal. If you leave a fixed deal before the end of the term, you may be charged penalties which can soon add up. Check whether there will be valuation fees or legal fees to pay, as this can increase the cost of swapping.

Changing to a new mortgage deal can save lots of money and reduce the mortgage term. However, as comparison can be complex, it is often better to seek professional advice from a mortgage adviser who has had CeMAP training.