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Throughout the United Kingdom people are finding that their Mortgage deal is coming to the end and it is time to start looking around again for a brand new deal. For some people who were perhaps tied into a high fixed rate this could be a real cause for celebration as they see their rate come down due to the exceptionally low Bank of England Base Rate.
Other people who are coming to the end of their current Mortgage deal will consider it to be a cause for concern as they try to work out what they should do next.
If you are starting to shop around for new Mortgage deals and are unsure of what you need to think about, take a look at our top 5 factors to consider and give yourself a head start
Factor 1: The Mortgage Rate
Most people believe that a lower rate is always better no matter what and although this is true it’s not really the whole story. The interest rate you are charge on your Mortgage is a percentage of your Mortgage balance. As such, the lower your Mortgage balance the less of a difference a reduction in your interest rate is going to make. The point here is that sacrificing everything just for a lower interest rate isn’t always worth it. Keep reading to find out more
Factor 2: The Fees
If you’re comparing Mortgage deals then keep your eye on fees. You may be able to add them into your Mortgage, but at the end of the day you are still paying them. A big fee can sometimes swallow any saving you make by taking a new deal so be sure to consider the fees before you commit
Factor 3: The length of the deal and Early Redemption Charges
You may find a lower rate, but does it finish too soon or tie you in for too long. Only you know what your plans are for the future, do you need the security of a new deal for a longer period of time or do you need the flexibility of being able to get out of your new deal sooner? Don’t forget most deals carry Early Redemption Charges if you come out of them early, which can make a huge difference if you find yourself in that position
Factor 4: To fix or not to fix - That is definitely the question
People are really unsure as to whether to go for a tracker mortgage while rates are low or whether to get a fixed rate for the security. Either way you would be taking a gamble. By getting a fixed rate, you could be tying yourself into a higher rate and if rates stay low for a long time, you could miss out on a significant saving. Alternatively, you might opt for a tracker only to see your rate and your payments increase beyond what you could have enjoyed on a fixed rate. The truth is what is best for you really is dependent upon which gamble you are most comfortable with. If you feel you need some advice before committing yourself, speak to an Independent Financial Adviser.
Factor 5: Comparing Mortgage Deals
Too many people make the mistake of comparing mortgage deals without doing it on a like for like basis, don’t fall into the same trap. If you are comparing deals and repayment figures, make sure the two quotes are both based on the same Mortgage term, on the same Mortgage repayment type and on the same Mortgage balance. If you don’t do this it could lead to you picking the wrong deal
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