What Do The Terms Apr, Aer And Ear Mean?

Mortgage lenders have a derogatory name for people who switch
mortgage lenders to follow lower rates – they call them “Rate
Tarts” The author has a much more apt description – Shrewd
Shoppers! After all, who spends more for exactly the same
product, in this case money, when you can get it cheaper
elsewhere? After all a £ from one lender as effective as a £
from another!
The mortgage market is highly competitive and as long as lenders
use price as the main weapon in their marketing platform, price
competition will encourage remortgagers to follow cheaper deals
Call them Rate Tarts if you must, but they’ll be the richer for
it!
In a response to curb mortgage switching, some lenders have
raised their up-front charges and others improved their customer
retention programmes In such a competitive market, accolades
will be awarded for the best customer retention programmes but
raising up front charges, will simply reduce the lenders market
share, albeit on improved profit margins It seems that lenders
still have to learn that carrots are better than sticks!
For example, Birmingham Midshires currently offers a 389% two
year fixed deal This looks like a clear bargain until you read
the small print – the arrangement fee is not the market average
of £500, it’s a massive £1,499! If you write off the fee over
two years at £74950 per year, it’s equivalent to an additional
three quarters percent interest on a £100,000 mortgage
So if you are tempted to remortgage you need to do two things
Firstly add up all the costs of moving your mortgage Remember
to add in the valuation fee (typically £250 on a £100,000
mortgage), the arrangement fee (typically £500), maybe a booking
fee (£50?), legal fees to switch the mortgage (usually around
£350 on a £100,000 mortgage), plus the cost of any penalties
you’ll be charged to exit your existing mortgage
Now it’s time to phone your existing lender
Tell them you are considering moving you mortgage for a better
deal Unless you put pressure on them, lenders frequently work
on the principle that provided they offer a fairly attractive
deal, customer apathy will prevail They rely on the fact that
many borrowers will be happy to sit tight and avoid the cost,
time and trouble of remortgaging So shake their tree and see if
a better deals falls out If they simply offer you their
standard variable rate they don’t deserve your business!
Once you have fully assessed the costs of moving, found the best
new deal you qualify for, and got your existing lender to quote
for keeping your business, you can make the comparisons and a
clear decision
Brokers Online is one of the largest finance websites in the uk,
they provide access to life insurance quotes and most UK
financial services including remortgages More information – How
Do I Know If I Should Switch Mortgages?

Tags | birmingham, carrots, competition, competitive, derogatory, existing, fee, margins, market, marketing, midshires, result, retention, shoppers