Mortgage Review Case Study (Benefits of Reviewing Your Mortgage)5th of June, 2020
Mortgage Review – Case Study
It is important to review your mortgage. There are many people either on their current lenders standard variable rate (SVR) or they stay with their existing lender without seeing what is available to them with other lenders.
Case Study 2020
I helped my client purchase their property in 2017. At that time they had a 5% deposit and required a 95% mortgage. This was taken over a term 30 years and cost £440 per month.
The interest rate available for their requirements at that time was a 3.95% fixed rate which was taken for 3 years. Around 3 months before the fixed rate was due to expire I got in touch and offered them a free mortgage review so we can see what their options were.
Their current lender had offered them a 3.09% fixed rate for 2 years or a 2.99% fixed rate for 3 years over the remaining term of 27 years so I wanted to see how that compared to the available products with other lenders.
We had a chat and went through their current circumstances and plans. Based on these discussions I carried out the research and was able to find a 1.84% fixed rate for 2 years . This was the best option for their circumstances at that time as they are looking at moving in 2 years or so.
The monthly cost for this over the remaining term of 27 years was £340 per month, which was a saving of £100 per month. During our conversations I asked if they were happy keeping their mortgage payment the same, as this could reduce the mortgage term and the interest payable. They saw the benefit of this and asked me to see what we could do.
Based on the interest rate of 1.84% we managed to reduce the term from 27 years to 20 years. The new payment was £433 per month (small increase of £3 per month to their current payment). Just by keeping the payment similar to what they are paying now this saved them over £13,000 in interest over the term of the mortgage and reduced their mortgage term by 7 years.
This particular case was a good example of what can be achieved by reviewing your mortgage. These large savings don’t always happen but it is always worth checking to ensure you are getting the best deal for your circumstances.
Don’t always assume you will be better staying with your existing lender and certainly try not to stay on the lenders SVR as you may be able to save each month or reduce your mortgage term.
Using a whole of market mortgage broker will help you review the market and your options. As part of my process I will always look to contact you around 3 – 4 months before you current deal expires to enable us to review your options. If you think I could help you please feel free to contact me or if you have any questions don’t hesitate to ask.
Mortgage products quoted were from the available at that time and are subject to change. Mortgage products available are subject to status.