The mortgage market is in constant flux. New deals pop up all the time, which means that just because a deal worked for you one year doesn’t mean it’s your best deal the following year.
When should I review my mortgage?
Other good times to review your mortgage are:
- When interest rates change
Changing interest rates directly affect the quality of your current deal compared to other deals on the market.
Only this month the Bank of England increased the bank base rate to 0.75%. And honestly, we’re likely to see more increases in the coming months and years.
Keep your eye on fluctuating interest rates to make sure your great deal hasn’t gone bad.
- When time’s up on your current mortgage
Don’t be the mortgage holder who lets their mortgage roll over when the initial period is over...shop around! If you renew a contract without any market comparisons, not only could you be passing up an opportunity to save money, but you might actually be charged more for a second term. Make sure you compare it to new mortgages in the market so you can make an informed decision. It’s worth giving yourself time to look before your deal comes to an end so that you’re not rushed into a contract that wastes your money.
What might you be charged when you switch your mortgage?
- Exit fees: Your mortgage provider might charge you an ‘exit fee’ when you terminate your mortgage with them. You’ll find this in the terms of your current mortgage, or on your lender’s website.
- Early repayment charges: Terminating your current mortgage could mean that you’re subject to an early repayment charge. This won’t be true for all mortgages, so it’s worth finding out whether this applies to you and how much the charges are before you decide to move. If you don’t know what an early repayment charge is, don’t worry. Dashly does, and it includes them in its daily calculations when checking the market.
- Valuation and legal fees: When you move to a new mortgage provider your might be charged valuation and legal fees. These fees will vary from lender to lender, and you might even find one who will pay the legal fee for you. Don’t overlook these fees when you’re thinking about switching - these are the kind of costs that are worth getting to grips with to find out the true cost of a mortgage. Sometimes a mortgage with a higher rate but a lower fee can turn out cheaper. These are the kind of calculations that Dashly can take care of for you.
- Booking and arrangement fees: A booking fee (sometimes called an application fee) is paid at the very start of your mortgage application. This is to reserve your funds while your application is processed. An arrangement - or completion - fee is paid once the application process is finished. This covers the cost of setting up the mortgage. You might be charged one of these fees or both. There are ways of choosing deals that come without these fees, but interest rates tend to be higher. It’s worth factoring this into your cost calculations as well.
It’s hard to keep track of these fees - not to mention calculating them into a switch! When developing Dashly, we decided that new deals could only be sent to customers if they still provided savings after every mortgage fee was accounted for. This way, Dashly customers get a deal, not just a new contract.
What documents do you need to switch your mortgage?
You will be asked to provide:
- Proof of your income: If you’re on a payroll they will need your recent payslips and bank statements. If you are self employed, you will be asked for your tax returns and accounts. These will need to be overseen by an accountant.
- Proof of your outgoings: Your lender will want to see what you’re spending, and where. They’ll want to take a look at your household bills, debts in repayment, and any bulky, regular living costs, such as transportation or dependents. They will use this information to determine how affordable your mortgage is. Your lender has a duty to make sure you can realistically meet the mortgage repayments within your available budget not just now, but in the future. This is to cover your back as much as theirs - the stakes are high if your repayment plan goes wrong!