Lender Standard Variable Rates – time to reconsider?

Thursday 08 September 2016 | 11:16 AM

You may well have recently received a letter in the post from your current mortgage lender.


Good news it will say…….your Standard Variable Rate mortgage is likely to have reduced by 0.25% following the Bank of England base rate change in early August and your monthly mortgage payment will be reducing accordingly. Probably not until October though!


But, dig a little deeper, and is it actually as good news as it may initially seem? Firstly, not all lenders are passing on the full 0.25%, choosing to retain some or all of the reduction as extra profit for themselves. And secondly, if you are paying your lender’s Standard Variable Rate, you are almost certainly paying the highest interest rate that your lender charges to any customer, new or old!


The mortgage market is awash right now with extremely competitive products for those looking to review their mortgage as lenders fight to grab market share. Most experts agree that both variable (i.e. tracker & discounted rates) and fixed rates are at historic lows so why not seek independent and comprehensive mortgage advice to see how much you might be able to save?


Most remortgage products come with a raft of fee free options, such as a free valuation and a free legal package, so the up-front costs to change lender and seek a saving on your current monthly mortgage payment are minimal. In addition, as you are on the lender Standard Variable Rate, your mortgage will be free of any penalties when you leave - a good adviser will quickly be able to confirm this and also take away most of the hassle by handling all of the paperwork on your behalf.


So back to the original question – why not use the letter which is almost certainly heading your way as a prompt. It might just be the best phone call/e-mail you make in 2016!!!


Local, face to face, independent mortgage and loan advice can smooth the whole process and we would be delighted to help.


Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at paul@innovateml.co.uk or tony@innovateml.co.uk or call 0191 223 3514.


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