Martin Lewis has explained that people acting fast could save themselves thousands on the cost of their home loans.
“The UK and world economic uncertainty has a silver lining for mortgage holders, “Martin told readers of theMoneySavingExpert.com newsletter.
That’s because fixed-rate loans offered by banks are generally based on something called “swap rates”, which try and predict where official interest rates will go in the future .
And the weaker people think the economy will be, the lower they think Bank of England interest rates will be – which means cheap deals right now.
“Long-term interest rate forecasts are low right now, and these feed into the mortgage rates lenders offer,” Martin said.
He pointed out the lowest two-year fixed-rate mortgage is just 1. 05% at the moment, while there are five-year deals for 1. 44%. That’s the the lowest they’ve been since 2017
In fact, there’s even a deal for less than 1% – a two-year tracker charging just 0. 98% interest.
But lowest rate doesn’t always mean cheapest when it comes to mortgages – with a whole host of other charges and factors meaning they might not be right for you.
What the deals do illustrate, though, is where the market is heading.
“These deals have specific terms, require decent equity and charge £ 1, 000 – ish fees, so they’re not recommendations, more a totem of how competitive the market is, “Martin said.
” So EVERYONE with a mortgage should check now if you can switch and save. The impact can be huge. “
Martin pointed to one money saver, who’s just made a saving of £ 160 a month on a new five-year deal.
“Nearly £ 10 , 000 saved over the fixed period. Wow, “he tweeted to Martin.
So how do you make sure you get the best deal?
First Martin explained you need to know where you stand with your current deal, that means find out:
- Your current rate plus monthly payments and outstanding debt
- Whether you’re on a fix, tracker or standard variable rate
- When your deal expires and what rate will it go to after
- How long is left on the loan – ie 10, 20, 25 Yrs?
- Are there penalties to leaving early and what they are
- What is your current LTV. This stands for loan-to-value, and effecitvely means how much of your home’s worth your mortgage debt represents. For example, a £ 150, 000 mortgage on a home worth £ 200 , 000 works out as an LTV of 75%.
If your is due to end soon, or you’re able to switch penalty-free now, ask your lender what its best deals are.
If you stay with your current provider you might be able to save on fees – and even if you still decide to leave it gives you an benchmark number to beat.
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Martin Lewis’ top money advice
When looking for the cheapest deals, he saidmortgage comparisontool can work offer a benchmark of what’s out there, but the “real key” is working out the best deal you’ll actually be offered.
That can depend on anything from the sort of house you have and your job, to your credit history and the lenders’ specific affordability checks.
That means using amortgage brokercan be a smart move – as they have information that’s not publicly available on the mortgage provider’s criteria.
The good news is there are now a series of free to use, independent brokers you can sign up with.
For more information, he pointed to his free PDFRemortgage Guide 2019that you can print out and go through at home as well as hisFirst -Time Buyers’ Guideif you’re not already a homewowner.
Other free resources MoneySavingExpert.com offers include itsBasic mortgage cost calculator, thecompare two mortgages tool, thefixed-rate mortgagescomparison tool, theditch your fixcalculator as well as thehow much can I borrowandmortgage overpayment calculator.
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