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Changing Mortgage Lender

Why does everyone keep talking about changing mortgage lender?
The basic answer is because you can save money! Many home owners are confused or a little bit uncertain about their mortgage product and how the Bank of England (BoE) base rate might affect them. It is probably true that most people decide they would like to buy a property and then take out a mortgage without doing too much research into the effect that interest rate changes may have upon their repayments over the longer term. 
If this sounds like you then take a few minutes to read this information and see how changing your mortgage lender could save you money every month and in some cases enable you to pay off your mortgage earlier than you expected.
Should I consider changing my mortgage product?
If you have not reviewed your mortgage terms and conditions for two or more years then it is well worth looking back through the paperwork to see if you are tied into any special deal or are free to move your mortgage to a different product, this could be with the same provider or a new lender. 
In the past most people saved and arranged a home loan with their building society and stayed with that same product and provider for the whole loan term. New lending approaches, competitive products and a growing awareness of the availability of different mortgage types have changed this scenario. 
Most financial advisors would suggest that all home owners check at least once a year to make sure that they are still getting good value for money and are aware of how any changes to interest rates may be having an impact upon their repayments. Home owners can then compare their current mortgage with new products that have come onto the market from a wide variety of lenders.
Identify what type of mortgage product you have
The vast majority of home owners have a standard variable rate mortgage, this means that if the BoE Monetary Policy Committee decides to increase the interest rate then mortgage lenders will follow suit and increase their own standard interest rate.  You can usually change this product without paying a penalty.
However if you have taken out a mortgage in the last ten years you may well have chosen a fixed rate mortgage product that guaranteed your monthly payments would not  be affected by any changes to the BoE base rate.  You will probably be able to change this product if you have reached the end of the fixed rate period.
Alternatively you may have a discounted variable rate mortgage that deducts a certain amount from your lenders standard interest rate for an agreed period of time, typically this can be in place for between two to five years. You will probably be able to change this product if you have reached the end of the special offer period.
However there are many other mortgage products including interest only, capped and offset that will probably have early repayment charges and conditions so before considering changing your mortgage lender you will need check that any special deal periods have expired.
What is the next step?
If you now know that you are not tied into a mortgage product then you can do your own research into what new special offers and reduced interest rates are available.  Be aware that the headline rates you see advertised will rarely give the whole picture and can sometimes be misleading. For example – a lender may advertise a very low rate but the small print will tell you that this will only apply if you are able to provide a substantial deposit. On the other hand you may think that a rate is high but discover that only a small deposit is required, other points to look out for include arrangement fees and early repayment charges.
Once you have an idea of the products and rates that are available it is well worth contacting a professional advisor to ask for advice and possibly find out about special offers that are only available through registered brokers. These services are usually free for borrowers as it is the lender that pays any commission.
Is it difficult or time consuming to complete all of the paperwork?
It is usually a straightforward process to arrange a new mortgage - a broker can usually fill in all of the forms and deal with the bank or building society paperwork. Some lenders will pay for legal fees and also undertake free valuations of your property, they are working hard to generate new business so will try to make sure that everything runs smoothly.
Will I really save money?
Most people who undertake a regular review of their loans, credit cards and mortgage will save money.  It is easy to become complacent about monthly direct debits and standing orders but a little bit of time invested in finding new suppliers of financial products can result in big savings.  Your home is probably your biggest investment and changing mortgage lender could be a very wise decision.

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