23 December 2015

5 questions to ask when choosing a new mortgage deal

Is your mortgage coming to an end? There may be a better deal out there.

If you opt not to switch at the end of your current mortgage deal you will usually be put onto your lender’s standard variable rate (SVR) mortgage. If this happens, check what the repayments will be before you decide to look for a new deal. Standard variable rates can move up or down in line with changes to the mortgage market, so your monthly payments can change, however SVRs often provide more flexibility than a fixed rate mortgage.

Here are some of the questions to ask before you choose a new mortgage.

Do I need to change lender?

Don’t assume that you have to change lender to get a better deal. It’s worth looking at the other mortgages your lender is offering, as it can be easier to stay with the same building society or bank.

If your mortgage is currently with Nationwide and if you're looking to switch your existing deal to another Nationwide mortgage deal, we will offer you our lowest rates as a thank you for your loyalty. Plus, as part of our Loyalty Rate Mortgages initiative we'll shop the high street so you don't have to. Each and every week, we check the remortgage rates on offer from Barclays/Woolwich, Halifax, HSBC, Lloyds, NatWest/RBS and Santander – then we beat them.

If you do decide that you want to remortgage, try shopping around early – about 6 months before your mortgage is due to end. That way, you’ll get an idea of what’s out there and what is most suitable for you and your circumstances. Also try to apply for your new mortgage 2 to 3 months in advance as it can take some time for an offer to come through.

Can I afford higher repayments?

It’s essential to consider the affordability of any new deal. Spreading your mortgage over a longer term, 25 rather than 20 years, for example can mean you pay less each month, but more interest overall. However, although a shorter term will mean you’ll pay your mortgage off earlier, it can leave you overstretched.

To get an idea of how much you may be able to borrow, try our mortgage tools and calculators.

What are the fees?

If you choose to move to a new mortgage with a different lender you may be charged fees for valuing your property and carrying out legal checks. You could also be charged a booking or arrangement fee, as well as a product fee. These can add up to a considerable sum. Plus, if you’ve decided to leave your mortgage deal early, you may have to pay an early repayment charge.

Take all the additional costs and fees into account and factor them into the cost of your new mortgage. You might find it works out cheaper overall to switch deals with your current mortgage provider rather than to remortgage with a new mortgage provider to reduce the number of fees that you could be charged.

What sort of mortgage do I want?

When your current mortgage deal ends there are some options available to you. You can move onto a new fixed or tracker rate mortgage, or you can revert onto your lenders SVR.

With a fixed rate you’ll know exactly how much your monthly payments are for the length of your deal, so you can have peace of mind that they will not change.

Tracker rate mortgages can move up and down dependent on changes to the mortgage market e.g. a change to the Bank of England base rate. Tracker rates are often lower and more flexible than fixed rates however there is the possibility that your rate could move.

If you find that these options are not right for you at this moment in time you can move onto your lenders standard variable rate mortgage. Similar to a tracker rate mortgage this can go up or down in line with changes to the mortgage market, however you are free to sit on this for as little or as long as possible.

What if my circumstances have changed?

Check the value of your home. If it’s gone up, you may be in line for a better deal - your personal circumstances can also make a difference. If your circumstances have changed you may want to discuss your options with an advisor. Nationwide’s Mortgage Consultants can assess your circumstances to help you select the Nationwide mortgage that best suits your needs.

If you decide to remortgage to a new lender, they will carry out affordability checks – you’ll have to show things like your bank statements and payslips as well as evidence of your bills and living costs. So if you’re earning less than you were when you took out your previous mortgage, you could have problems getting a better deal.

Rewarding your loyalty

If you’re an existing Nationwide mortgage customer and you choose to switch to a new deal with us, you'll always be offered our best rates, and with our Loyalty Rate Mortgages initiative we'll beat the high street too.

Each and every week, we check the remortgage rates on offer from Barclays/Woolwich, Halifax, HSBC, Lloyds, NatWest/RBS and Santander – then we beat them. Terms and conditions apply. To compare rates, you’ll need to know your house value, mortgage balance and your Loan-to-Value band.

Find rates for me

All mortgages are subject to underwriting and criteria. Minimum age 18.


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