Stop Your Mortgage Lender Fleecing You – Get Your Own Back And Save Thousands

Interest rates are likely to rise this year, and lenders will take any opportunity they can to boost their margins. So avoid being fleeced by checking out a better deal while rates are still low.

House prices went up in most regions last year, believe it or not, and mortgages are becoming easier to get – more competition means keener rates, and that will save you money on your mortgage.

There was a 22 per cent rise in the number of mortgages available at 85 per cent loan-to-value (LTV) last month. Even with just 90 per cent LTV, you can now choose from 165 more deals – 11 per cent more than a month ago – according to data from one of the biggest comparison sites.

Mortgage rates are falling

Mortgage rates have started to fall as a result – by an average of 0.71 per cent since October. If you had an interest only mortgage of £100,000 at 4.71 per cent, it would cost you £392.50 a month. So a fall to 4 per cent would save you nearly £60 a month, or £720 a year.

First-time buyers will benefit most from the relaxing of lending criteria, as they will need a smaller deposit, but anyone looking to remortgage now can also reap the rewards. They will need to have less equity in their property to achieve their goal.

Get off expensive SVRs

Remortgaging would be worth considering now if you are at the end of the deal – especially for Skipton BS borrowers. Its standard variable rate (SVR) will rise from 3.5 per cent to 4.95 per cent from March 1.

Other lenders’ SVRs have risen significantly in the last year, a surprise given the Bank of England Base Rate has been on hold at 0.5 per cent since last April. Despite that, eight lenders – building societies Nationwide, Ipswich, Skipton, Scottish, Cambridge, Marsden, Mansfield, and lender Accord Mortgages – have all raised their SVRs to dig a bit deeper in your pocket. Almost all are now around or above 5.5 per cent, according to data from Moneyfacts.

The differences between the best and worst rates are shocking. Chesham Building Society has an SVR of 6.45 per cent, compared with just 2.5 per cent at Cheltenham & Gloucester, Cheshire BS, Derbyshire BS, Lloyds TSB Scotland and Nationwide BS – the latter only if you took your deal out before April 29, 2009. Otherwise you will be on 3.99 per cent.

Move your mortgage

Remortgaging has been less appealing – and sometimes impossible – through the height of the credit crunch. But lazy borrowers sitting on their bank’s SVR could now be wasting as much as £5,670 a year if they are on the most expensive, rather than cheapest rate.

So make a move on your mortgage even if you are not moving house. The chances are you will have more value in your property to play with now than last year, because there is good news on that front too.

Property prices up again

The latest house price data from Nationwide, showed that all regions apart from Northern Ireland saw property price rises at the end of last year. The North South divide is still evident, with southern regions seeing stronger rises than northern parts. But the news could be bad for those looking to buy a new property in the coming year.

The average house price in the 4^th quarter of last year was £162,116 – up 1.6 per cent on the previous quarter, and 5.9 per cent over the year. As the UK officially comes out of recession – just – the pick-up in property prices should give the economy another fillip.

Property transactions fell by nearly two thirds between their peak in January 2007 and the low of November 2008, according to Nationwide. Its chief economist Martin Gahbauer (correct) does not expect interest rates to rise until the second half of the year. So get your skates on if you want to bag a deal now.