Blog Archives

Post Brexit: no need to panic when it comes to your mortgage

27.06.2016

There is no better time to get a mortgage than now as nobody knows for sure what is going to happen to rates in coming weeks or months. What we do know is that fixes and trackers are currently at all-time lows.

We also know that the private banks we have spoken to all confirm that their appetite, pricing and lending policy is exactly the same as it was before the outcome was known and they don’t expect that to change over coming weeks or even months.

Those borrowers who want security may wish to opt for a fixed rate as this will give certainty for at least a couple of years which will see us through some of these unchartered waters. Two-year fixed rates are pegged from an incredibly low 0.99 per cent for two years while five-year fixed-rate deals start at 1.99 per cent.

Those who can afford to be wrong – that is if rates rise they could still afford to pay their mortgage – may wish to opt for a base-rate tracker, perhaps with no early repayment charges so they could switch to a fix were interest rates to start rising. Rates start from 0.89 per cent above bank base rate, giving a pay rate of 1.39 per cent.

Adrian Anderson
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Adrian Anderson

Watch out for mortgage gimmicks

20.06.2016

Buying a home is expensive, which is why Halifax is offering first-time buyers and home movers a £500 gift card for Currys PC World when they apply for a mortgage. The idea is that this perk will ease the financial pressure on buyers as they furnish their new homes.

Perks and freebies may be tempting, particularly if you are buying a home on a budget, but when you are making a decision as important as which mortgage to go for you need to look beyond such gimmicks. Look at the overall cost of the mortgage over time to compare like with like and see how much the perk is actually costing you. It may work out cheaper in the long run to opt for a mortgage with a cheaper rate and no perks, for example.

For example, if you borrowed £250,000 to buy a £500,000 property, then Halifax offers a two-year fix pegged at 1.74 per cent with £999 fee, £465 valuation fee and £2,000 cash back. This costs £24,534 over the two years. The next best-priced deal is Nationwide’s two-year fix pegged at 1.59 per cent with the same £999 fee, a free valuation and £500 cash back. This costs a total of £24,770 over the two years, so the Halifax deal is cheaper.

However, if the mortgage is bigger, then the cost over two years changes. If you are borrowing £400,000 on a value of £800,000, for example, then the Nationwide deal costs £39,320 over two years and is cheaper than the Halifax deal with a total cost of £39,493.

If you are struggling with the sums, a broker can help.

Jonathan Harris
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Jonathan Harris