Turbulence in the UK financial markets has had a huge knock-on effect for homebuyers – but the mortgage your bank offers might not be the best deal for you.
The financial upheaval of the last few months has led the Bank of England to raise base interest rates on a scale not seen for many years, with mortgage lenders following suit.
Dan Harris, a partner at Q Financial Services based in Wellington and Shrewsbury, said: “It’s understandable that the mortgage lenders are suffering the jitters, but the uncertainty has had a major impact on those trying to mortgage or re-mortgage.
“In more settled times borrowers were often advised to fix their mortgage rate, but that’s not necessarily the best thing for everyone at the moment. At the end of October the best fixed rates for two or five years were up to 5-6% per cent – in this context, tracker rates are suddenly looking much more appealing.”
A tracker mortgage is one with interest rates which “track” a base rate, usually the one set by the Bank of England. Dan said tracker deals offered lower interest rates with either no early repayment charges or much lower costs, depending on the lender.
He added: “This gives borrowers hope that they are not stuck with a high rate for five years. Obviously, there are potential downsides to consider, including the risk that the Bank of England will continue raising interest rates until they go beyond the fixed rates.
“The key thing is to not just accept what your bank offers you, as there could be other options which will save you money.
“Speaking to an experienced and independent mortgage adviser who understands the markets and has a full knowledge of what’s available is vital. Your bank will understandably offer you the deal that best protects their interests, but that isn’t necessarily the best deal for you.”
Contact us for full and independent advice about your mortgage options.
