Our clients know that it pays to keep in touch with us. Why? So that we can make sure that they are not paying more than they should be – and as a mortgage broker firm often looking after a client for many, many years, it’s our obsession to help people save money and take years off their mortgage.
Not everyone gets this though! Plenty of folk are already on a good deal, and don’t always see the value in keeping in touch with their broker. But – are they (or you?!) missing a trick?
Past example: saving £2,500
Here’s an example of how we saved a client over £2,500 and knocked 2.1 years from their mortgage, by giving them some great mortgage advice! (Names have been changed to protect the innocent.)
Mr and Mrs Smith are on a base rate tracker with Nationwide (meaning the rate can go up or down at any point). They are on a good deal at 2.75%, which sounds great and has served them well. We get to talking and I suggest that I could take a look at current products for them.
We talk budget and they agree they can afford £1,200 per month. They’d also like the option to overpay as and when they have the cash.
Here’s what happened next:
Good morning Mr and Mrs Smith,
Thanks for giving me the opportunity to source your new mortgage.
Just so you know, I deal with almost 100 lenders and more than 12,000 different products so we have plenty of choice.
Based on what you are looking to do, I have sourced some products using the following criteria:
Valuation = c£250,000
Mortgage balance = c£123,000
Available options sourcing in today’s market:
|Rate %||Product Type||Mortgage Product fee £||Monthly Repayment @ 9 years||Monthly Repayment @ 10 years||Incentive by lender||LTV||Follow on rate||Follow on payment||Total cost||Broker fee||APRC|
|1.84||5 year fixed||£995 (can be added)||£1,236 (adding fee will add £5)||£1,122||Free legal free valuation*||60%||4.24||£1,290||£133,442||£395||2.4%|
|2.09||5 year fixed||£0||£1,250||£1,136||Free legal free valuation + £300 cashback||60%||4.24||£1,335||£135,262||£395||2.4%|
(The above rates are accurate as of 02/02/2019)
There are marginally lower interest rates than 1.84% but once you include the higher fees on these products, they come out more expensive over your deal period. I always source on best ‘true cost’ over the deal period e.g. 5 years in your example.
Also, there are marginally lower rates than 2.09% with no product fees, saving you around £3 per month – but the product I’ve suggested above gives you £300 cashback as soon as your mortgage starts, so overall, it’s a cheaper deal. You could opt to pay that £300 straight back into the mortgage; marginal saving but still a saving.
Just to give you an example of overpaying the 1.84% year deal (10 year term): assuming you overpaid each month by £278 (meaning you pay £1,400 per month), you would repay the debt two years and one month early, saving you £2,555 in interest payments alone.
* Free legal free valuation means the lender will cover the cost of a survey on your property and cover all the standard legal work from transferring you from your existing lender to the new lender.
We’ve no hidden fees – for mortgage advice we charge a flat fee of £395 for two applicants (no VAT) in total for sourcing, administering and applying for your mortgage, which includes chasing the lender through to offer etc. The fee is only payable once we are applying for your mortgage.
Saving money for clients – and for you!
As you can imagine, Mr and Mrs Smith are delighted and wish to proceed. They’re thrilled to be reducing their mortgage term and saving over £2,500 in the process!
So, the moral of the story, folks – it really does pay to speak to your adviser, even if you think you are on a good deal.
We want to help you save too – get in touch and we’ll be happy to carry out a free, no obligation review of your current mortgage. How would you spend your potential savings?
|Please note: the above information is not a typical everyday example and is subject to every individuals’ circumstances which would need to be discussed with your adviser. Mortgage products available to you could be higher in interest rates and fees.|
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.