With banks happier than ever to lend, there is much competition on the market to offer a product that is different from the rest, so it can be difficult to know which mortgage product to choose. Picking the right product can ultimately save you money in the immediate and the long term. The wrong product could cost you dearly.
Securing a long term fixed product may seem like a steal at the moment with rates being historically low, however, we can never be certain about our circumstances further down the line. Trying to exit a long term fix before the product has expired can be very costly, with early repayment charges sometimes as high as 5% of the outstanding loan amount. Special features can cancel out any negative exposure to early repayment charges such as portable products, allowing you to transfer a mortgage to another property, so long as the lender is content with the new security.
It is also important to consider the cost of remortgaging every 2 years as product fees, legal charges and valuation fees can really add up. Having a window to assess your circumstances could lead to new opportunities where otherwise you would have to wait until your current product expires, by which time it will likely have flown.
With the base rate looking very likely to move for the first time in years, many clients who are not averse to fluctuating payments are looking to pick up a base rate tracker, which would see them paying less interest than the market equivalent 2 year fix. With a base rate drop on the cards, this could certainly be a good buy for the time being.
Knowing the implications is key and will nearly always allow you to make the right choice. That’s where we at Enness come in – to guide you on which mortgage product to choose to best suit your needs.