Save Thousands on Your Mortgage
Are you paying too much for your mortgage?
Phil Farrelly advises
In recent times many people will have come across advertisements encouraging them to convert their existing mortgage to a tracker mortgage.
In simple terms, banks have until recently charged consumers more than was necessary for taking out a mortgage.
In the past, banks offered standard variable rate mortgages which typically had a mark-up/margin of up to 1.5%. They now recognise that people are not prepared to pay such exorbitant rates, and people are voting with their feet.
Interest rates have increased eight times in the last two years. Affordability has become a huge issue, and banks now realise that they must offer better value for money as people shop around.
For instance, the average standard variable rate quoted today by banks is 5.45% (APR 5.7%). Alternatively, if a consumer opted for a tracker mortgage, a rate of as little as 4.7% (APR 4.8%) could be obtained with little or no fuss. This rate could even be discounted further depending on the size of the mortgage compared to the value of the property.
Based on a typical mortgage of 350,000 over a 25-year term, customers could pay as much as 40,000 too much over the lifetime of a loan by opting for a standard variable rate mortgage.
So what is the problem?
Banks sometimes fail to tell existing customers about these cheaper “tracker” products. Such customers may end up repaying excessive amounts, blindly ignorant of the other choices available.
While new customers are attracted by competitive tracker mortgages, existing clients often don't realise they are paying too much.
Where to from here?
Independent research tells us that almost 90% of people who took out mortgages more than three years ago still remain on expensive standard variable rates.
Currently, there is huge turmoil in the financial markets. Consequently, the smart money suggests that tracker mortgages, in their current form, may soon be withdrawn and replaced by inferior products. We recommend that people take immediate action - not next week or next year but TODAY.
Please note the following warnings with regard to financial products:
Fixed Rate Loans: You may have to pay charges if you pay off a fixed rate loan early.
Debt Consolidation Mortgage: This new loan may take longer to pay off than your previous loans. This means you may pay more than if you paid over a shorter term.
Variable Rate Residential Mortgage: The cost of your monthly repayments may increase. If you do not keep up your repayments you may lose your home.
Interest Only Mortgage: The entire amount that you have borrowed will still be outstanding at the end of the interest only period.
