Monday, 19 June 2017

How to choose the right life insurance: the 7 questions to ask


Life insurance (or life assurance as it’s sometimes also called) is one of the lengthiest financial commitments most of us make.

But choosing the right life insurance policy can be confusing. And that’s even before you’ve received the lengthy application forms you have to fill in.

First, the good news. Getting a life insurance policy is one of the cheapest ways of making sure you care for your family or loved ones if the worst were to happen to you.

Now, the not-such-good news. You do have to think about it. The Childhood Bereavement Network’s figures show that by the age of 16, one in 20 children will have lost one or both of their parents.

So in this guide, we’ll explain how life insurance works. And tell you the questions to ask to get the right life insurance for your needs.

Types of life insurance

 

There are various kinds of life insurance. Some protect a mortgage.

Some protect your dependents. Others can provide a way to reduce your inheritance tax burden.

Here, though, we’ll look at the sort most people need. That’s life insurance to provide for your family if you or your partner were to die.


  • Do you need life insurance?


You’re single. If you’re single now and don’t have debts more than your assets, then the answer is likely no. But will you be single forever?

If not, consider taking out a life insurance policy while you’re younger. It’ll cost far less than if you apply for one when you’re older.

You’ve got dependents. You’ve a family, partner or relatives who depend on you? You pay the mortgage or take care of living expenses?

Then the answer is yes. Having life insurance means they'll be looked after in the event of the unthinkable. You’ll also have the reassurance that they won’t struggle to pay the bills on top of dealing with grief.

  • What kind of life insurance policy do you need?
For most people, it’s level term life insurance. By taking it out, you’re paying for peace of mind.

Level term insurance pays out a set sum, say £500,000, when you die during the fixed term you set. This lump sum won’t change. So you and your dependents know it will be there for them.

You can also arrange instead to make the pay-out a monthly sum you decide is right to meet their living expenses etc. In this case, it’s described as a family income benefit policy.

In both cases, the money gets paid out whether you die one year into a say 20-year term or at any point up to the end of the 20-year term.

If you don’t die within the term, you don’t get any of the money you’ve paid back. In other words, there’s no cash-in value.

  • How do I decide what figure to insure myself for?
To choose the right life insurance for you, look at your circumstances. And also how much you can afford in monthly premiums.

It’s often a good idea to talk to a life assurance advisor to help you work all this out.

Best advice from Martin Lewis of moneysavingexpert.com? “Roughly cover 10 x the annual income of the highest earner till kids have finished full-time education.”

But it’s good to factor in covering the following too:
  • Any outstanding debts. This includes your mortgage if you don't already have a separate policy in place.
  • Immediate outgoings your dependents would need to pay.
  • Future planned large outlays, such as school and university fees, or wedding costs for your children
  • Funeral costs


  • How long do I need life insurance for?
The length of the term is up to you. The longer it is, the more the policy premiums will cost.

Most people with children insure themselves until when they think they’ll no longer be reliant upon them. So think: when will my kids be able to stand on their own two feet?

You could time your life insurance term to end on completion of full-time education, or a few years later.

If it’s a partner you want to keep supported, then it should be at least until you reach pensionable age. That’s assuming you’re in line for a reasonable pension. Otherwise, fix the term accordingly.

  • I'm married so should I be looking at a joint life insurance policy?
Joint policies tend to be a little cheaper than single policies. But they only pay out once. That’s normally on the event of the first death. If you and your partner have no dependents, a joint policy can be simpler.

But, statistics show that up to 42% of marriages end up in divorce. So you might feel safer with two single policies from the outset. Later on, if you had to cancel the joint policy and buy two single policies, based on your new age and health, it would be more expensive.

  • How does my state of health affect the life insurance policy price?
A lot. Costs of cover are related to your likelihood of death within the term. Your age, health, type of occupation, and whether you’re a smoker or non-smoker, will affect the price.

Be 100% honest in your application or an insurer can use non-disclosure as a reason not to meet a claim. Many providers ask you to go through a medical examination before acceptance.

If you’ve a pre-existing medical condition, it's particularly worth speaking to a broker. They'll know which insurers will give you the best rates.

  • Will my life insurance payout be liable for inheritance tax?
In theory, yes, as it’s counted as part of your estate.

But it’s easy to avoid this by writing the policy ‘in trust’ at the time you take it out. Most insurance companies will include the documentation when you apply to them.

Other types of life insurance policy

 

These are the basics of life insurance. There are a number of other products, however, you can choose.

These include:
  • Increasing term life insurance or index-linked term life insurance.
    This protects your money against inflation. The sum insured either increases by a fixed amount each year, or follows the Retail Prices Index (RPI) measure of inflation. But your premiums will also rise too.
  • Renewable term insurance.
    This builds in the option to renew your life cover when the policy term finishes without the need for a health review.
There are also ‘add-ons’ you might want to consider. These include:
  • Terminal illness cover
    can be included in your life insurance policy. So the policy will pay out early if you’re not expected to live for more than 12 months.
  • Waiver of premiumcover can be included in your policy for a small additional amount. So if you’re unable to work due to illness or injury, your premiums will be paid for you. Usually, this cover only starts when you have been unable to work for at least 26 weeks.

So there’s a lot to think about if you’re to choose the right life insurance. And much as you can’t see into the future, it’s a good idea to think about all possible scenarios when you choose your policy type.

Do you need more information on the life insurance explanations here? Or would you like talk over your circumstances to help you choose the right life insurance product? We'll be happy to help you here.

Below are some of the insurances Mortgage Advice Services can offer you today, do not hesitate to contact us. Our advisors are ready to answer any of your inquiries.



For more information you can also contact us on telephone number 01332 257087.


Tuesday, 6 June 2017

Why remortgaging your home now is such a good investment decision



Whether you’re a lion or a mouse when it comes to investing, hopefully you can spot a good opportunity when it happens. UK interest rates are still at 0.25%. This is their lowest level since the Bank of England was established in 1694. On the back of this, available rates for remortgaging your home have dropped to levels previously unimaginable. The average two-year fixed-rate mortgage is currently 42% cheaper than in 2014, says the Bank of England. Five-year rates are down 38%.

Huge competition among lenders has led to a battle for new customers. It means some of the lowest remortgaging products ever are now on offer. Happily for borrowers, there’s no sign of the lenders' rivalry for customers stopping soon too. So, if you’re thinking about remortgaging your home, now’s a good time.

Do you have equity in your property?
And you’re not locked into a fixed deal?
Or you’re nearing the end of your term?
Or you’re on your lender’s standard variable rate (SVR)?
(This is the default rate most fixes and trackers revert to when the introductory deal finishes.)

In this case, your savings can be huge. Most SVRs are at 4% or higher. Then you’re in an ideal position to take advantage. Remortgaging could save you money and release cash.


Remortgage your home and save £100s

 

 “Are you already a homeowner and you are not on a super-cheap mortgage? Then it’s got to be worth seeing how much you could save on mortgage repayments,” says the author of the popular investment blog Monevator.

“Why are these puny rates not raved about like soaring Dotcom stocks or National Lottery winnings in the 1990s? They’re more lucrative for most people,” he asks.

Actually, more of us are recognising the grab-it-now opportunity that remortgaging our homes is. The housing market is sluggish. So remortgaging activity is now propping up the slowing mortgage market. In April alone, it accounted for 33% of total lending.

A total of 38,475 people in the UK remortgaged their homes in April. That’s an 8% increase compared to March and a 10% annual rise.

Remortgage and protect against inflation

 

Monevator believes that having a mortgage is a financially savvy move. That’s long as you can afford the repayments of course. The reason is that inflation is rising. At the date of writing (May 2017), it stands at 2.7%, up from 2.3% in March. It’s estimated to be 3% by the year end. However, the Bank of England has opted to keep its base rate at 0.25%. 

What does that mean for remortgaging your home? Monevator explains: “Anyone who thinks a mortgage is bad news when inflation is running high is wrong. An affordable mortgage secured on a real asset – a house – is an excellent thing to have at times of high inflation.”

That’s providing you secure a remortgaging deal at less than the rate of inflation. With inflation headed to 3% and your cheapest two-year fix only charging you, for example, 1.49%, you'd get what Monevator describes as “one heck of a deal”.

“Sure, you’ll have to make debt repayments every month. But for the next couple of years, it’s likely that inflation will be eroding a … mortgage as fast as the bank can bill you for it,” he says.

Your options for remortgaging your home

 

The remortgaging rates available depend on how much of your home’s value you’re borrowing.

Do you have plenty of equity in your home? With current offers around now for a two-year fix, you’re in strong position if you’ve a 40% deposit.Typical rates lenders are offering now range from 1.19% to 1.83%. For a 10% deposit, rates are around 1.99%.

Certain yours is a home for life? Then typical rates for a 5- and 10-year fix with a 40% deposit are 1.74% and 2.49%. For a 10% deposit, rates are around 2.74% and 3.89%.

Of course, there are arrangement fees and terms and conditions with all these offers. And penalties for ending your current fixed rate mortgage early. We explain about these here. But even with these, many deals still make financial sense for a lot of people.

Get the best remortgaging advice

Calculating the money you could save from remortgaging your home and choosing the right deal can be befuddling. Our 10-point checklist here will help you get ready to remortgage. Follow it and you’re more likely to have your application accepted too.

If you’re comfortable with navigating the best buy tables and comparison sites, then take a DIY approach to remortgaging. But many people prefer to have the reassurance of a mortgage broker. That’s because the information about what different lenders accept isn’t available to the public.

A good broker will secure you your most competitive rate. Then they’ll make sure you’re eligible for it, saving you wasted applications.This is even more relevant if you have special circumstances such as being self-employed.

Grab the moment: remortgage while rates are low

 


"Some old wolf will come along and tell us that mortgages are terrible if there’s a big recession and you lose your job and interest rates rise, and you can’t keep up the repayments. Wise and true," says Monevator.

"Fact is though, nearly everyone reading this article will at some point have a mortgage. Better to get them when they’re cheap."

Want help on the information supplied here or to talk about your remortgaging options? Then feel free to contact us here.

Friday, 2 June 2017

The 3 big mistakes not to make with your home insurance

Home insurance is a catch-all phrase for the policies you put in place to protect your property and its contents against the unexpected.

Having home insurance is important whether you’re a homeowner or a tenant. No matter if you live in a flat, a bungalow or a mansion, it’s wise to have it.

The Association of British Insurers (ABI) says 76% of households have contents insurance and 64% have buildings cover.

Home insurance covers you against theft. It also protects you against damage caused by unexpected perils. These include flooding, fire and explosions, burst pipes, falling trees, riots, storms and subsidence.

There are two kinds of home insurance: buildings insurance and contents insurance.

Here, we’ll explain these so you can work out what exactly you need to for your circumstances.

We’ll also tell you the three blunders never ever to make…

Types of home insurance

 

First up, there’s buildings insurance. This covers the bricks and mortar of your home. It’s there to protect the structure of your home and any permanent fixtures and fittings. These include your fitted kitchen units and bathroom suites. Policies also usually cover garages, greenhouses and garden sheds.

So if you’re a homeowner, this is a must. Most mortgage companies will insist you have buildings insurance as a loan condition.

If you’re a tenant, however, buildings insurance is usually your landlord’s responsibility.

Second, there’s contents insurance. This covers the cost of replacing or repairing your possessions. These include items such as your TV or carpets, if they’re damaged, destroyed or stolen.

You need contents insurance if you’re a homeowner and if you’re tenant too.

Third, there’s combined buildings and contents insurance. This is right for homeowners. It’s almost always a cheaper way of buying insurance than getting two separate policies. But read the small print. Some insurers make you pay separate excesses on both parts of the policy.

For a free quote for Buildings and Contents Insurance, contact Mortgage Advice Services on 01332 257087

The 3 home insurance big errors to avoid

 

Blooper number 1: Never ever auto-renew

 

Yes, you have a busy life. But by just letting it roll over and auto-renewing your current annual policy you could be wasting £100s.

This is one area where loyalty rarely pays. Insurers hike the cost of cover for loyal customers at the time of renewal. They then use the profits to offer new customers the better deals.

Most people would be better off by shopping around each time by using comparison sites or a specialized broker.

This is important because home insurance costs are rising. By as much as 8% for buildings cover and 4% for contents year on year, reports Moneysavingexpert.com.  To keep down costs, make sure you never just auto-renew.

Blooper number 2: Don't over-cover with your buildings insurance

 

A big gaffe many homeowners make is to cover themselves for the market value of their property.

Again, you could be wasting £100s. All you actually need to insure is the ‘rebuild value’. That’s how much it would cost to rebuild the property if it were knocked down.

How do you find this out? If you’ve an unusual, listed or valuable property, then you could commission a survey. But the Association of British Insurers' (ABI) can help most people. To get a reasonably accurate rebuild value, visit the ABI's calculator here.

As an example, the ABI quotes £190,000 for the rebuild value of a typical four-bed detached house. It cites £80,000 for a typical two-bed semi-detached bungalow.


Blooper number 3: Don’t under-cover your contents insurance

 

Under-insuring means you’ll get less than the value of your items when you claim.


Say you insure £20,000 of possessions when you actually have £40,000. When you need to make a claim, you'll only have 50% of your contents protected.

Companies will then pay you pro-rata according to the % of the true value covered. So when you claim for your damaged £5,000 all-ultra HD TV, you’ll only get paid out £2,500.

To get this right, go from room to room and add up everything. This means even smaller items such as clothes, on a 'new-for-old' basis. Don’t forget the lawnmower or equipment in your garage or garden shed.

The ABI has a useful guide to download to help you value your home contents.

But as a rough pointer, the value of home contents for the average UK household is £45,000.

You then have a choice of policy extras. These include ‘new for old’ and personal possessions cover (so items are covered if you take them away from home). Or home emergency cover (to pay for the cost of calling out a plumber or tradesman).

How to choose your home insurance

 

Get in possession of all the facts about the your re-build cost and your home contents value. Then make use of the range of comparison sites available.

Be careful to look at the terms and conditions to make sure they meet your needs. If you’re unsure about any aspect though, it’s often worth using a specialist broker.

The same goes if your circumstances are not standard. These include living in a property that's listed, thatched, made of wood or has experienced floods or subsidence.

A good broker will save you money. They know the market. They'll be able to find you the home insurance policy that meets all your needs and is good value too. They’ll check the complex stuff in the small print for you too.

For fast advice on the best home insurance policy for you, contact us here.




Tuesday, 2 May 2017

Thinking of remortgaging your home to release equity? Your best options explained

Are you considering remortgaging your home to release equity to get more space? Or fund an extension or home improvements?

Then you’re not alone. More and more of us are cashing in the value we’ve built up on our properties. Remortgaging is allowing more people to turn their existing homes into their dream homes. It’s not difficult to shift your mortgage from one lender to another. Often you'll get a better deal, without the hassle of moving home.

Why remortgaging deals are so competitive now

The low-interest remortgaging deals available now are among the most competitive ever. That’s because lenders have cut fixed-term and tracker rates in the past two years to record lows. This on the back of the Bank of England’s 0.25% base rate. February 2017 saw an eight-year high in remortgaging. Rising house prices, linked to the shortage of homes for sale on the property market, was also a factor behind this. In fact, Mortgage Finance Gazette says the number of people remortgaging rose by 35% in the year to February. That’s the highest since January 2009. The trend’s likely to continue as the base rate doesn’t look set to change anytime soon. The consensus view is that the Bank of England will keep the rate at its record low into 2018. The expected slowdown in economic growth that uncertainty over Brexit will cause is why.

Your options for remortgaging your home to release equity

Rising house prices mean many homeowners have accrued equity. If this is your situation, then you might well want to look at a cheaper remortgage deal. You could cut your monthly repayments by climbing the loan-to-value bands. Or release cash for home improvements. You might find you can do both. “Those who can remortgage to a lower rate can potentially find that they can borrow more money. This is while keeping monthly payments the same,” says Thisismoney.co.uk. With mortgage rates so competitive, remortgaging your home to release equity may seem like a clever way to borrow cheaply. But borrowing more means paying more interest. So if home improvements are your aim, is remortgaging a better idea than other loan options? Here’s what you should think about.

First, work out your equity

Equity is the share you own of the value of your home. Let’s say your home is worth £200,000 and your mortgage is £150,000. Then your equity is £50,000. There are two ways you build up equity. Either your home value appreciates or you pay down your repayment mortgage. Your current lender will tell you the value of your home, compared to your outstanding mortgage. But it might charge a fee. To avoid this, you can get estimates first from three estate agents and use the average.

Next, compare your remortgaging options

There’s plenty of information online about remortgage deals via comparison sites and best buy tables. Most remortgaging deals fall into two categories: fixed rate or variable. With a fixed rate, your repayments are set for the length of the deal, which can give you peace of mind.
With a variable rate, they can and will usually move up and down, normally due to changes to the UK economy. Variable rates usually fall into three categories.
• Trackers: these track the base rate
• Standard Variable Rates: these roughly follow the base rate by usually 2-5%
• Discount Rates: these offer a discount from the SVR, usually for 2-3 years

You’ll need to know your loan-to-value (LTV) to see what you can apply for. The impact of a lower LTV can save you a huge amount of cash. The more equity you’ve got, the lower your LTV and the better the interest rate you’re likely to get offered. So work out how much you want to borrow first. Then look at your current mortgage repayments and the cost of your potential new repayments. Decide if you can manage larger monthly outgoings. Factor in any exit fees from your current mortgage and arrangement fees for the new mortgage. If they’re hefty, they could eat into the equity you are releasing.

Consider what other loan options would cost

Before jumping ship, think about your other options for funding home improvements. If you don’t need a big sum, you could consider asking for a further advance from your existing lender. Some lenders will have set rates at which you do this. Others will give you a choice from their standard mortgage deals. You could also think about getting a personal loan or a credit card loan. You have to pay these off more quickly so you’ll have to pay more each month. But in the end, you won’t get charged as much in interest. It’s all a question of doing your sums and working out what you can afford.

How to get the best remortgage deal

It’s always worth asking your current lender what they’ll offer you. Many have what they call ‘product transfers’. After all, they don’t want to lose your custom. You also won’t have to go through the affordability checks other lenders will make. If you’ve done your homework, found the remortgage product you want, and been accepted, congratulations.
If not, consider using a mortgage broker. They’ll assess your circumstances. Then they'll and help you find the remortgage deal that saves you most money. Martin Lewis of Moneysavingexpert.com says: “Chances are that using the right type of broker will be the best bet for most people. They can whittle down the top deals quickly and offer you an extra layer of protection if things go wrong.”

Want clear advice on the best deals for remortgaging your home to release equity? Get in touch with us here.

Friday, 28 April 2017

Remortgaging your home? Speed up the process with our 10-point checklist


Today’s historically-low interest rates mean there are big advantages to remortgaging your home. You might well save money by reducing your monthly payments. You could also release equity. Or you could use the savings to pay for home improvements. Are you considering grabbing one of the competitive re-mortgage offers available on the market now? Here’s how to ensure you’re ‘remortgage ready’.

Action plan for remortgaging your home

1. Work out how much equity you’ve got in your home
The more equity you’ve got, the better your options. And the lower your loan to value (LTV). If you owe £135,000 and the house is now valued at £180,000, you have £45,000 equity. That £45,000 is equivalent to a deposit for someone buying a property. Get your house valued before your lender sends a valuer. Ask for valuations from three estate agents or use a free house price valuations guide. Bear in mind the effect of your LTV. This is the advice of Martin Lewis of Moneysavingexpert.com. He says: “Realistically, you’ll need to be borrowing less than 95% of its current value. And to get the best remortgaging deals, less than 60%.”
2. Do your research to find the cheapest possible remortgages for your circumstances
There’s lots of comparison information available online. This is either through comparison sites or best buy tables. Yes, the vast number of remortgaging products out there can seem confusing. And this is where a good mortgage broker can help. But doing your own research first will give you a ballpark idea of what’s available for remortgaging your home.
3. Make sure you factor in lender fees
While rates have plummeted, remortgaging fees have risen. So calculate the cost over your deal term. Doing this isn’t complicated. Simply divide the fee by the monthly term. Say you’re looking at a two-year (24-month) fixed mortgage and the fees are £2,400. Then the cost will work out at an extra £100 a month. A caution from Martin Lewis. “Once your loan falls below a certain amount — say around £50,000 — it may not be worth switching lender. This is simply because you are less likely to make a saving if the fees are high. In fact, some lenders won’t even take on mortgages below £25,000. The smaller your mortgage, the bigger the effect any fees you pay to remortgage will have.”
4. Get your finances in order for the affordability checks
April 2014 saw the introduction of the government’s Mortgage Market Review. This means all lenders now have to do more to show that borrowers can afford to pay back their mortgages. The only lender that won’t do this is your current one. But they’re unlikely to be offering you a better deal. We’ll break down the steps below to take to improve your chances of having your remortgage application accepted.
5. Be clear on your credit score
The first thing lenders will do is check your credit score so get a leap ahead of them. You can get a free credit report by signing up with a credit rating agency. You don’t need to pay to do this. Some do it for free, such as Clearscore or Callcredit. Or you can sign up for a free monthly trial with Equifax or Experian. With these two, remember to end the trial before 30 days is up. Make sure your credit report is correct before you apply to remortgage. If you do find your credit score is wrong, you’re entitled to contact the agency and have it corrected. You can also go to the free Financial Ombudsman to do this if you need to.
6. Make sure you’re on the electoral roll
If you’re not, then sort this out fast. If you’re not registered to vote, you’ll be unlikely to get a remortgage. Lenders use the electoral roll to check your identity.
7. Pay off any outstanding loans
This goes for bank loans or money owing on credit cards. Set up a direct debit to make at least the minimum repayment on credit cards. That way you’ll never be late or miss a month. Ideally, try and pay all these off before you apply for your mortgage so you’ve got a clear slate. If you can’t manage this, then at least slash your debts. Aim to reduce what you owe to at least 50% of your credit limit. Say it’s £10,000, then use less than £5,000. And don’t take out any more loans while you’re going about remortgaging your home. Above all, stay clear of Payday loans. These are a red flag for lenders.
8. Assess your bank statements as a lender will
Most lenders will ask to look back at your bank statements for up to six months. So it’s better not to have gone overdrawn in this period. Watch your spending across this period and be frugal. Lenders will look at all your outgoings. That includes your utility and phone bills, childcare costs, grocery bills and motoring costs etc. Pay everything on time. Even one missed mobile phone bill payment could affect your remortgage application.
9. Stay in the same job for at least six months
You’ll improve your chances of remortgaging your home if you’ve been in the same employment for at least six months. Lenders want to see you’ve a regular income. Expect to have to show pay slips over the last 3-6 months. If you’re self-employed, it can be harder to remortgage. You’ll need full evidence of your income. This'll usually be three years of business accounts, signed off by a certified accountant. Remember you’ll get assessed on your self-employment profits, not your turnover.
10. Consider using a mortgage broker
This goes for whether you’re employed or self-employed. But in the second case, you’ll find one especially helpful. A broker is basically a qualified and regulated mortgage adviser. They’ll do a lot of the legwork for you. Lenders vary a lot in terms of whom they’ll accept for remortgaging. Brokers will have a strong understanding of the products you’re likely to get accepted for.
Want straightforward advice on the best deals for remortgaging your home? Get in touch with us here.

Wednesday, 29 March 2017

Why 2017’s the year to remortgage your home to save money

Have you got an existing mortgage? Then it’s well worth checking to see whether you can remortgage your home to save money now.
It might well pay for your next summer holiday.
Despite the uncertainties that Brexit has caused, 2017 so far is the best year yet to remortgage.
That’s because lenders have slashed fixed-term and tracker rates in the past two years to record lows. The average rate on a two-year fix was 2.3% at the end of February, according to Moneyfacts.co.uk. That’s against 2.6% a year ago.

Remortgage before you fall into the SVR trap

Are you on a standard variable rate (SVR)? Or about to go on one because your fixed, discount or tracker mortgage is due to end? Then chances are you’re missing out on the best deals around right now.
Letting your mortgage lapse to the SVR could be an expensive mistake if your fixed-year deal ends and you don’t take action. That’s because most lenders put their SVR at a much higher rate than the Bank of England base rate.
It’s estimated that as many as four in 10 mortgage holders are now forking out their lender's SVR. Are you one of them?
Let’s put the cash difference in perspective if you’re thinking of remortgaging your home to lower your outgoings.
The latest Bank of England figures put the average SVR at 4.49%, although they can be as high as 6%. Put that against the average quoted two-year fixed rate of 1.42% for borrowers with a deposit of 25%. Does that make the penny drop for you?

Cover the cost of your summer holiday by remortgaging

To help you understand, let’s look at what the difference could mean for your monthly costs.
Say you’ve a £200,000 repayment mortgage over a 25-year standard term length. And you plump to stay on the SVR at the end of your two-year fix. Then your monthly repayments will go up by an average £163 according to Moneyfacts.co.uk. That adds up to £1,965 a year.
That’s well over the average £1,300 cost of a summer family holiday for four.
That’s without spending money.
This difference between SVR and other types of mortgage rates has soared since 2014. It’s down to the lower base rate which means competition between lenders has deepened.

But can you afford to remortgage?

All this makes it sound as if you can’t afford not to remortgage. But before you do, you need to check if you can afford to...
Maybe you got a mortgage five or 10 years ago easily. Today, though, you might not reap the rewards of today’s low rates. Not if you don’t get through lenders’ new tough affordability tests that began in 2014.
The government introduced these to make lenders work harder to show borrowers could afford their mortgages. Some lenders today put you through “stress testing”. This is checking your ability to pay under imaginary future interest rates rises of up to 7%.
It’s not all gloom and doom though. It’s well worth shopping around. Most lenders use affordability calculators to work how much they’ll lend. The figures vary a lot. Some lenders still offer couples up to five times salary mortgages. That's as long as they’ve a clear credit history and limited personal debts.
There’s a whole lot more that goes into the criteria that decides whether you’ll get the remortgage rate you want. Your employment status and credit score are part of the picture. So is the size of the remortgage you’re after.

Get the answers via a remortgage broker

There’s rarely been such an overwhelming choice of remortgage options on the market as now. And finding you way though the maze of offers and the different acceptance criteria can be tough.
So, first get a good grasp of what’s out there via the best buy tables or comparison sites. Then it’ll probably save you time and money to go to a good mortgage broker.
Mortgage brokers will save you putting in wasted applications and getting rejections. That’s because they can quickly check all the mortgage deals across the market. They know the different credit scoring and affordability criteria that lenders want too.
A good mortgage broker can be a powerful weapon,” says Martin Lewis of Moneysavingexpert.com. “They’ll be best able to match you up to a remortgage you’ll get accepted for.”
In most cases, that’ll be one that saves you money too. And sunny thought, even cover the cost of your next summer holiday...
Want clear advice on the best deals for remortgaging your home to save money? Get in touch with us here.

Friday, 17 March 2017

Fixed rates are on the rise. Is it time to get yours?

5 five reasons to lock into an ultra-low fixed remortgage rate


Smart UK homeowners are rushing to take advantage of today’s rock bottom fixed remortgage rates.
The deals available are some of the cheapest ever. But they may not be around for long. It’s why thousands of savvy homeowners are scrambling to remortgage fast and cash in.

Figures by the Council of Mortgage Lenders show the number of people remortgaging in January soared by 46% over December 2016. And, 21% more homeowners chose to remortgage in 2016 than in 2015.

“Those who have not yet switched to a fixed-rate deal should act quickly,” says Sam Brodbeck, senior personal finance writer at The Telegraph. “Fixing your rate should be a matter of urgency.”
A survey by moneyfacts.co.uk shows that 31% of eligible homeowners are hoping to cash in on low interest rates in 2017 with a mortgage switch.

Remortgage rates have rarely been better

Are you looking to save money by remortgaging? There are strong political and economic reasons why remortgaging now makes sense. Opting for a fixed rate does too.
Here are 5 reasons why now’s a good time to grab an ultra-cheap fixed-rate deals.
  1. Lenders are offering historically low fixed rates. So it’s the perfect moment to capitalise on them. Remortgaging your home means you could save money by lowering your monthly outgoings. Or release equity. Or fund home improvements such as an extension or loft conversion.
  2. These deals are not going to be around forever. Some rates are already beginning to rise. Nobody knows how Brexit will impact the UK economy. But the Office for Budget Responsibility thinks inflation will rise above the Bank of England’s official 2% target by April. A cost of living rise might push it to hike its leading Bank Rate from its all-time low of 0.25%. Variable mortgage rates will increase then. Cheap fixed rate deals for new borrowers and remortgagors will shrink too.
  3. Political uncertainty means future wage growth and cost of living are out of your control. Remortgaging to fix your mortgage makes one part of your personal finances predictable. A fixed-rate mortgage means the interest rate you’ll pay is fixed for the period, whatever happens. It&squo;s why the popularity of longer fixed rate deals has surged.
  4. Lenders are offering historically low rates on 5- and 10-year fixed deals. But they’re starting to increase. These long fixes used to be unpopular with borrowers but not anymore. A lot of remortgagors see the security as a real plus now. Yes, there’s a risk that taking a longer-term fixed rate could see you paying over the odds if rates change. But, say independent experts moneyfacts.co.uk: “This is not a large risk in the current low rate environment.”
  5. If you’re thinking of remortgaging your home, the chances are you’ve got some equity in it and a lower loan to value (LTV). This means you’ll likely get a much better remortgage rate.

Should you remortgage now with a fixed rate? A few things first

  • The cheapest remortgage deals are not all about rate. Lenders add extra charges, such as arrangement fees. Do your sums and check the deal is as good as it sounds.
  • You’ll have to undergo an affordability test. When you took out your first mortgage, did the lender just check your credit score and multiply your income? Now lenders want a lot more detail.
  • Considering fixing for 5 or 10 years? Factor in the effect of early repayment charges. Some deals are more expensive to end early than others.
  • Think about using a broker to help you find the right remortgage rate. That’s what Moneysavingexpert’s Martin Lewis recommends. “A broker should be able to quickly source a relevant product that fits your credit history. And offer an extra layer of protection if things go wrong. And carry more clout with lenders to ease acceptance on otherwise unobtainable mortgages.”
Want straightforward advice on remortgaging your home? We’re happy to help here.