| Plus... Prime Day, 30% off McD's, 2 sunnies £22, water-saving FREEBIES  THE TOP TIPS IN THIS EMAIL
| | Martin's alert to EVERYONE with a mortgage
'Rates have dropped below 1% - check urgently if you can switch & save £1,000s. Acceptance isn't always easy, but don't just accept the status quo'
 New mortgage deals are at their LOWEST EVER rates, with two-year fixes down to 0.95% and five-year fixes at 1.17% (though in some cases they load the cost in the form of hefty fees). The cause? A perfect storm of...
- Ultra-low UK interest rates
- A house-buying boom boosted by a stamp duty cut
- Banks with a glut of cash to lend as so many people built up savings during the pandemic
The result is ferocious lending competition for the best customers. That means, for some, remortgaging - switching deal without moving property - can result in phenomenal savings. Martin Evans just tweeted me: "@MartinSLewis I'm fortunate I've been able to work at home through the pandemic. I've been able to remortgage and my payments are over £150/mth cheaper ." A £1,850/yr saving.
Yet while on the surface it looks like a boom time for mortgage holders, you needn't be Bob Geldof to smell a rat. Getting accepted for super-cheap mortgages ain't easy, especially if you've received Covid support. Therefore my aim isn't just to show you 'the cheapest mortgage' - it's really about 'the cheapest mortgage you can get'.
Delays are rife right now. Act in time to avoid moving to the SVR
The stamp duty deadline and house-buying boom means brokers, lenders and conveyancing solicitors are in massive demand. This means things are taking longer, sometimes months right now. Those on fixed or discount deals ending this year, beware. When they end you're usually bumped on to lenders' far more expensive standard variable rates (SVRs). To avoid that, you'll need to start earlier than normal, 3 to 6mths before it ends, particularly if you're self-employed or have complicated circumstances. The aim is to see if you can find a far cheaper mortgage, including help through the substantial acceptance pitfalls that many are facing right now. 1. Start by gathering the details on your current deal. This makes it easier to switch, and to see if switching is worth it. Find out: a) What's the rate? Plus monthly payments & outstanding debt.
b) What type is it? Is it a fix, tracker, SVR etc? See fixes vs variables.
c) When's the intro deal over? Eg, when does a 2yr fix end?
d) When must it all be repaid? Eg, does the term end in 10, 20, 25yrs?
e) Will I be penalised to switch? Are there early repayment / exit penalties during your fix or tracker deal? If so, it isn't usually worth switching, though it can be on rare occasions - see Ditch your fix?
And crucially:
f) What's the loan to value (LTV) - the proportion of the home's value you borrow? This is about how much equity (how much of the property) you really own. For example, if you owe £180k on a £200k home your LTV is 90%. See LTV help for more.
2. Check the best deal (product transfer) your existing lender will give you. Moving with the same lender is called a 'product transfer'. It didn't used to be a good option, but now as your existing lender needn't do affordability checks if you're not borrowing more, it can work out well for some.
This is helped by the fact there are typically no or lower fees, and less paperwork involved. So it's a good start point, but always carry on to check whether you can take advantage of competition to beat it.  3. Speedily find the market's cheapest deal. Now spend five minutes on our mortgage comparison tool to see if it's likely you're going to be able to save by going elsewhere. Be aware ultra-low-rate deals often mean higher fees, and you must factor these in - our tool does that for you to make comparing easier.
The biggest factor affecting rate is your loan to value (LTV). Mortgages start at 95% LTV - and availability and interest at this level has improved recently - but it's still usually far cheaper at 90%, again at 80%, 75% and then bottoms out at 60% of a home's value. There can also be minor gains at each 5% in between. | A sample of the cheapest rates avail right now (£150,000 mortgage) | | Type | Intro rate + arrangement fees | Cost (1) | | Typical SVR for comparison | 4.5% | £10,000/yr | | Fix, 2yrs 60% LTV | 0.95% + £1,499 | £7,340/yr | | Fix, 5yrs 60% LTV | 1.17% + £1,525 | £7,220/yr
| | Tracker, 2yrs 60% LTV | 1.39% + £999 | £7,390/yr | | Fix, 2yrs 90% LTV | 2.83% + £999 | £9,040/yr | | Fix, 5yrs 90% LTV | 3.29% + £999 | £9,030/yr | | Fix, 2yrs 80% LTV | 1.79% + £1,023 | £8,010/yr | | (1) Based on intro rate, including the fees spread across the deal time (which is why a higher 5yr rate with the same fees as a lower interest 2yr rate can be cheaper) on a 25yr term. |
As for whether to fix or not, the more you value certainty and being able to stick to a budget, the more you should hedge for a fix, and fix longer. The more you're willing to try to gain every penny, the more freedom to go for a tracker. See fixes vs trackers for more. 4. Acceptance depends on credit and affordability checks. As well as the lender needing to be happy with the property (one MSE team member's flat was once refused a mortgage as it was too close to a Nando's), there are two core checks you must pass for a remortgage. It's impossible to second-guess it all, as each lender is different - some may decline you for having more than half your credit cards on minimum repayments. - Are you creditworthy? A poor credit history can torpedo a home loan application, or at least mean you don't qualify for the cheapest deals. So check your credit file (for free) to ensure there are no errors, and minimise other applications, excess debt and credit (ie, access to borrowing even if unused) in the run-up to getting a mortgage. See my 37 tips to boost your creditworthiness. - Can you afford it? Lenders must also do strict checks to see if you can afford mortgage repayments, not just at current rates, but stress-testing how you'd cope if they rocketed. They want evidence of income, bills, expenses and sometimes even eating out.
If you're likely to be close to the wire, being frugal in the months leading up to application is worthwhile. Though lockdown will have helped that for many (making it a good time to apply).
For more help, see 18 tips on boosting your mortgage chances.  5. Brokers can make a big difference - they know acceptance criteria unavailable to the public, and some deals are 'broker only'. All this complexity means it can be difficult to find a lender that will accept you. If that's your issue, I'd strongly suggest you use a mortgage broker.
As well as guiding you through remortgaging, they have details of most lenders' acceptance criteria, which aren't easily obtainable by the public, so can match you with the right deal - plus many deals can only be accessed via brokers (even some product transfers are broker only). The team have come up with top nationwide 'fee-free' broker picks (brokers are paid via commission from lenders) incl L&C Mortgages*, Habito* and Trinity Financial* (it normally charges a fee, but not via this link). For full details of how the system works, pros and cons, how to find brokers near you, and when paying fees may be worth it, see top mortgage brokers. | The perils of remortgaging after coronavirus financial support - both furlough and the self-employment grant
It feels unjust. Yet if you have been a recipient of personal Covid-based financial support, remortgaging can at best require more paperwork, at worst be kiboshed entirely. - Furlough - expect scrutiny or even rejection. For those who were on furlough, but are now fully back at work, the lender will want to see proof of your return to work, usually via at least one month's payslips. That should be enough, and things will then work as normal.
It's trickier if you're still on furlough or part furlough. It doesn't automatically exclude you, but of those we checked only three of 13 lenders accept furlough income as part of a mortgage application - the rest ignore it for their calculations, meaning rejection or a smaller mortgage offer.
See our How much can I borrow? guide for more on how furlough can affect your ability to remortgage.
- The self-employment grant is a hurdle for remortgagers. While receiving a SEISS grant in the past isn't an automatic reason for mortgage rejection, sadly some have been told it is evidence of business viability problems (as by applying you declared you needed help) and have been rejected.
Though receiving an earlier grant but not a later one can sometimes be viewed as evidence of a turnaround.
For those still receiving SEISS grants, of the 13 lenders we asked, six explicitly said they don't take money received from a SEISS grant into account, while only two said they would - the rest were vague. There are no hard and fast rules.
As for whether those who are eligible, and struggling, should still apply for SEISS 5 when it comes out, my view is if you need the cash, do it - mortgage savings are usually no substitute for direct cash being paid into your account. For those struggling to get a mortgage due to these schemes, product transfers from your existing lender, and using mortgage brokers, are the best routes to navigate through this. |
6. Remortgaging is more difficult if you're self-employed. Aside from the Covid self-employment grant issues, many lenders have tightened self-employment criteria since the pandemic, so give yourself extra time to prepare.
- Some lenders cap how much you can borrow. Eg, Santander's max self-employed LTV is 75%, Nationwide's is 85%.
- You'll need rock-solid proof of your business's viability. Up to 6mths' worth of business and personal statements may be required. One major lender told us that mortgage underwriting for the self-employed is 'much more complex' than pre-Covid. 7. Will rates get even cheaper? The economy is bouncing back, and some have mooted there's an inflation risk. All of which would indicate long-term interest rates are more likely to rise than fall. We've even seen fixed-rate savings start to increase, and when that happens, usually mortgage rates move roughly in tandem.
Yet right now, my guess is banks' glut of savers' cash and the ferocious competition is likely dampening the risk of a rise to mortgages.
For a second opinion, we asked mortgage guru Ray Boulger of John Charcol. His view is for those with a large amount of equity (ie, lower LTVs) there's not much room for rates to go lower in any case. But he believes there may be some scope for rates to drop for those at the higher LTV end. 8. Worried you may miss the boat, but your fix hasn't ended? Many lenders let you lock in a rate 3mths ahead, a few even go to 6mths in advance, so it's wise to check within that window. However, locking in can incur a non-refundable booking fee of £100 - £250.
If you're worried about rates rising, you could see this as an 'insurance' cost, so you've the rate if you need it, but if things get cheaper, forgo it, lose the fee and go cheaper instead. See long lock-in mortgage help for full info. 9. Live in a block of flats? You may be hit by the cladding scandal. Extra vigilance around building safety has led to a cladding nightmare. Some properties - such as blocks of flats - are now viewed as un-lendably risky by lenders.
Therefore even to remortgage, never mind sell, they might ask you to provide an EWS1 safety certificate (introduced after the Grenfell disaster). There is disquiet from some that these forms are asked for even when not necessary. As Elmono tweeted me today: "@MartinSLewis Can't remortgage without the EWS1 cladding report. Stuck on a crappy rate even though the building is safe. UK Govt has been an aberration on this issue." Many, including me, think the Govt simply hasn't done enough to help those caught by this through no fault of their own. It is tough to navigate this - best routes are speak to your existing lender about product transfer options, and again, try a mortgage broker.  10. Got any savings? Use them to bag a better mortgage deal. The pandemic has been financially catastrophic for some, but generous for those who have earned the same but spent less. The Bank of England says over £180bn extra of savings has built up.
If you've savings, you can utilise them to get a cheaper mortgage. As I mentioned above, rates tend to improve as you move down to 90%, 80%, 75% and 60% LTV, so when you remortgage, use savings so you need to borrow less for your mortgage. It can really pay off.
For example, if you had a £150,000 mortgage, and used an extra £1,000 of savings to get you to 75% LTV, the top 2yr fix drops to 1.18%. This means you'd pay £580/mth, as opposed to 1.79%, which was £625/mth. 11. Try to go £100 beyond any LTV threshold. If you've worked hard to get enough together to reach the next LTV band, eg, 90% or 75%, try to push to £100 beyond that. It means it no longer looks to mortgage underwriters like you're scraping to get to the limit and can ease acceptance. 12. How much is that mortgage in the window? So you've got the mortgage and your own details. But how do you know if and how much you'll save? Well, our Ultimate Mortgage Calculator has a host of tools, incl...
Mortgage calc - incl what it'll cost | Compare two mortgages | Compare fixed-rate mortgages | Mortgage Overpayment Calc | Ditch your fix? | How much can I borrow? A final word about mortgage prisoners. Sadly, 200,000+ people are trapped in extremely costly mortgages as long-term victims of the financial crisis. I do worry the cladding crisis and pandemic will see their numbers swell too.
Campaigning to help mortgage prisoners is a priority for me personally and MSE. While we've been quiet in the last few months (see the most recent mortgage prisoner update), we are still working on it and committed to pushing and lobbying Govt for a solution. | | DON'T believe the fake 'Martin Lewis' or 'MSE' ads
Lots of scam ads litter social media and even newspaper websites - some of these lie that we or Martin promote Bitcoin, binary trading etc. See Fake ads warning. | New. First Direct boosts its FREE CASH to £125 - making it top bank for service and upfront bribe. Take advantage of the reignited banking war It's a good week for bank switchers, as two biggies have boosted their offers, matching the largest free cash bribe in 2021. So unless your bank makes you deliriously happy, why not ditch and switch? The process is easy, as you use the banks' seven (working) day switching services and they move all direct debits and standing orders, close your old account and auto-forward payments. Most tell us it's easy and hassle-free (while there's usually a not-too-harsh credit check). Full info on these products and more help in Best Bank Accounts, but in brief... -
 New. TOP PICK: Free £125, top service, £250 0% overdraft. First Direct* is now an even clearer front-runner as it currently pays newbies a boosted £125 to switch (was £100) - yet don't hang about, as this offer's only around for a few weeks.
A huge 91% rated it 'great' in our latest customer service poll, plus you also get access to a linked 1% regular saver and many will get a £250 0% overdraft too (it's about 40% above, so avoid).
How to get it: Switch and pay in £1,000 within 3mths of opening the account (you don't have to keep the money in there). To count as a newbie you can't have had any account with FD before, or have opened a current account with sister bank HSBC since Jan 2018.
- New. Free £125 + 1% regular saver. First Direct's sister bank HSBC has also just launched a free cash offer for newbie switchers to its HSBC Advance* account - you get the £125, plus a linked 1% regular saver. Yet as its service rating is a lower 42% great, we can't see why you'd go for this and not First Direct unless you've ever been an FD customer and want some switch cash. For full eligibility details (as a few FD customers don't qualify), see who can get HSBC Advance.
- Free £140 wine, £50 to charity and 2% interest on up to £1,000. This is the real alternative to First Direct, and has the plus that it's available to existing HSBC customers too. New Virgin Money switchers get 12 bottles of wine which it says are worth £138 (you can't buy 'em elsewhere so we don't know for sure - pls be Drinkaware). Plus it'll pay £50 to your choice of charity, pays 2.02% AER variable interest on up to £1,000, and its debit card is a top pick for overseas use.
How to get it: Apply online, then switch incl 2+ direct debits, register for its app and put £1,000 into its linked 0.35% easy-access savings account (and keep it there till you get the wine code). You don't qualify if you've had a Virgin, Clydesdale or Yorkshire Bank current account since Nov 2020.
- Top for bills accounts - up to 3% cashback. This is good if you've a bills account (eg, a joint account you pay household bills from). For a £2/mth fee, Santander 123 Lite* pays cashback on bills you pay from it via direct debit, eg, 1% on council tax, 2% on energy and 3% on water. Those with mid-to-large household bills should make £40-£80/yr after the fee.
How to get it: You just need to pay in £500+/mth and log on to mobile/online banking every 3mths. There's no need to switch account or move all your payments to it, though of course you will want to move all bills that qualify for cashback to it. | Martin: 'Stop over-worrying about your credit score - it's not actually a real thing.' Martin's new blog debunks the myth, explaining why the scores you get aren't real, when you should and shouldn't worry, whether it's possible to improve your credit-worthiness and more. See Martin's new blog & video: Credit scores aren't a real thing. Amazon 'Prime Day' starts Mon - we get our crystal ball out, eg, 30% off Fitbits, 50% off Alexa? Prime Day perversely lasts two days, and while many deals are often meh, there are usually hidden corkers. See our Prime Day predictions (sadly no discounts on crystal balls).
New. 12 Spotify tips to pay less and play more. Incl free vs 'Premium' plans, boosted 3mths free on Premium (for new and ex-users), account-sharing rules and cheaper alternatives. Spotify savers How to get 30% off the whole McDonald's menu till Sun. Please eat responsibly - full info in 11 McHacks. TWO prescription sunnies £22 all-in. MSE Blagged. Cheapest we've seen this deal. Spec-tacular New. Get £40 cashback for investing £400. MSE Blagged. If you plan to 'robo-invest' - where investments are selected for you based on your attitude to risk - then after fees, this Wealthify deal is equiv to a 9.6%-ish head start, provided you keep the full investment for a min 6-7mths. (The fact we've included it doesn't mean we recommend Wealthify - it's just if you're going to use Wealthify anyway, you can get cashback). 2,000 available. See Robo-Investing Cashback, incl info on the deal + how robo-investing works. 600,000+ water-saving FREEBIES, eg, £20 shower heads and £5 tap inserts. There's new stock in, more than we've ever seen before, though what you can get depends on your supplier. Free water-saving gadgets
Martin wants a favour... Over to him: "My ITV live shows have made the TV Choice Awards final again, and with your help we won last year. If you liked it / saved, pls vote (page 11, Best Lifestyle Show - though you must click through to the end). It's a very powerful tool to show TV bosses about how important consumer info on TV is. Thank you." | New. The cheapest broadband we've seen in a year
BT-owned Plusnet launches a deal at just '£13/mth' including line rent, or get superfast fibre for '£18/mth' Millions are being ripped off with expensive broadband prices. Check what you pay each month - often it'll be £30-£45 when you include line rental, yet most who are out of contract can easily halve that, saving £100s/yr. And this is the perfect time to check as a raft of providers have launched short-term deals at ultra-low prices - likely as demand has been slow recently. In fact, the Plusnet deal is the cheapest of any speed we've seen since June 2020 (once you factor in all the annual price rises). TOP NEWBIES' HOME BROADBAND & LINE DEALS
All postcode-dependent, links go via our full broadband comparison to check eligibility.
| | DEAL + EQUIV COST (1) | HOW GOOD IS IT? | BENCHMARK: Many pay £30-£45/mth for standard speeds
| Terrible. Even if you don't want to switch, use the prices below to haggle.
| New but ends next Wed (23 Jun).
Plusnet 12mth contract
MSE Blagged
- 10Mb basic speed '£13.03/mth'
| Cheapest broadband & line deal since June 2020. Apply via this Plusnet 10Mb link and you'll pay £18.50 in month 1, then £19.35/mth for the remaining 11mths of the contract. Yet as you're AUTOMATICALLY sent a £75 prepaid Mastercard, factor that in and it's equiv to £13.03/mth over the year. MSE customer service rating: 'Good'.
| New but ends Fri.
Vodafone 2yr contract
- 63Mb superfast '£17.58/mth'
| Cheapest SUPERFAST fibre broadband & line we've seen in 2021. Plus it's only a smidgeon more than the cheapest 35Mb fibre (half the speed). Apply via this Vodafone 63Mb link by 11.59pm on Fri and it's £21.95/mth, but you can CLAIM (don't forget) a £105 Amazon, Tesco or M&S voucher. If you'd spend it anyway, factor it in and the cost is equiv to £17.58/mth over the 2yr contract. MSE customer service rating: 'OK'.
| New but ends next Thu (24 Jun).
Virgin Media 18mth contract
MSE Blagged
- 108Mb megafast '£18.40/mth' | Cheapest MEGAFAST fibre broadband & line (only available to 52% of homes). For those with a need for serious speed, apply via this Virgin Media 108Mb link and it's £23.95/mth, but we've blagged you an AUTOMATIC £100 credit on your first bill. That gives you 4mths free and makes the equiv cost £18.40/mth over the 18mth contract. Note: you're told if your home qualifies when applying. MSE customer service rating: 'OK'.
| | Customer service ratings are from our Feb poll, and are relative as few broadband firms set the service world alight. (1) To compare, we use 'equivalent costs' - adding all costs, deducting promo credits and averaging over the contract. | - At least 50% of customers must get the advertised speeds at peak times. All providers above also tell you the estimated max you're likely to get before you sign up. Do check your current speed and see our 8 speed-boosting tips.
-
Switching usually only means about 2hrs' downtime. You're told the switch time in advance and it's often quick, while you won't usually need an engineer to visit. With Virgin though there's more chance of needing one: for new customers, about 60% don't need a visit, and if that's you, then you'll be told before applying, but others may do. Some leaving Virgin may need an Openreach engineer to come. -
Be warned - most firms hike prices a little during your contract. If your contract warns you, you're stuck with the rise. If not, most providers let you leave penalty-free within 30 days - though check at the time to see if you can beat your deal before switching, as hikes tend to be small. -
Do note when your promo ends. Then switch again at the end of the deal or try to haggle down the price. | Tell your friends about us They can get this email free every week | | AT A GLANCE BEST BUYS | | New. Free £125 to switch + top service: First Direct
New. Free £125 to switch + 1% regular saver: HSBC | | THIS WEEK'S POLL How do you rate your bank's app? If you access your current account by app, please rate it (just the app, not the bank overall). Half of MoneySavers say they've moved their savings in the last year. Last week, we asked when you last shifted your savings to get a better rate - over 3,000 people responded. Some 52% said they've switched accounts in the last 12 months, a drop from 61% in May 2020. Meanwhile, 13% told us they've NEVER moved their savings. See full savings poll results. | MARTIN'S APPEARANCES (WED 16 JUN ONWARDS) Thu 17 Jun - This Morning, ITV, 10.55am, then phone-in from 11.10am MSE TEAM APPEARANCES (SUBJECTS TBC) Sat 19 Jun - BBC Radio Leicester, Mid-morning with Summaya Mughal, from 11am
Mon 21 Jun - BBC Radio Manchester, Drive with Phil Trow, from 2.20pm
Tue 22 Jun - BBC Radio Berkshire, Mid-morning with Sarah Walker, with Guy Anker, from 11.35am
Tue 22 Jun - BBC Radio Cambridgeshire, Mid-morning with Jeremy Sallis, from 12.40pm | 'A COLD WATER BOTTLE AT NIGHT WORKS A DREAM' - YOUR HOT-WEATHER MONEYSAVING TIPS That's all for this week, but before we go... much of the UK has been basking in warm weather in recent days (though temperatures have now dropped in some places). So we've been asking for your top tips on keeping cool without spending a fortune, which could come in useful all summer. Your sun-busting secrets include a regular misting of water using a £1 spray bottle from Ikea, running wrists under the cold tap and taking a cold water bottle to bed. One MoneySaver even wears a homemade ice scarf, filling a sock with rice and freezing it. Read more ideas and share your own in our hot-weather MoneySaving tips Facebook thread.
We hope you save some money, stay safe,
The MSE team | |
Comments
Post a Comment