Recent polls of moneyfacts.co.uk users showed that 18% of us have changed mortgage providers because of poor customer service. Because a friend had a bad experience with a certain mortgage company, 28% of us haven't gone with them.
Many of us don't switch mortgages, even when it would be in our best interests to do so. It can seem like a lot of trouble, but when you think about how much money you could save, it is often worth it. We shouldn't move our mortgage until we have a bad experience with a lender.
When you want to switch mortgages, the first thing you should check is if there are any fees for leaving your current one. When we get a mortgage, we are usually locked in for at least the first few years. For example, if we had a five-year fixed-rate mortgage and wanted to leave before the first five years were up, we would probably have to pay a fee, which could be as much as a few thousand pounds in some cases. Other mortgages have penalties that last longer, so we'd still have to pay even after the first period is over. If you ask your lender how much it will cost, they'll tell you.
When the first part of your mortgage is over, you usually switch to the lender's standard variable rate. Most of the time, these rates are higher than what other mortgages offer. The average standard variable rate right now is about 6.3%. If you look at the mortgage best buy charts, you can find rates that are less than 5%. At a rate of 6.3%, the monthly payments on a GBP150,000 mortgage over 25 years would be GBP994.15. At a rate of 5%, the same mortgage would cost GBP876.89 to pay back. This is a difference of GBP117.26 a month, or a huge GBP1,407.12 a year.
When choosing a mortgage, you should also think about the term, type of rate, deposit, insurances, and fees. Read more about these in our guide to things to think about when getting a mortgage.
