Compare And Save

Suppose you’re remortgaging and simply ¬†want to find the cheapest mortgage over the next 5-years. For this exercise I’m ignoring features like payment flexibility or a number of more personalized features that could be taken into account.

Say you want to borrow $120,000 on a repayment basis over 15 years and had $40,000 equity so the property is worth $160,000.

You want to compare the total that would be spent over the next 5 years to find the cheapest.

We need to account for all fees (survey, booking fees etc.) and not just the mortgage payments.

On this day the search returned 267 mortgages.

The cheapest mortgage was $834 per month over 5 years with a total outlay of $51,400.

The highest outlay was $1084 per month over 5 years with a total outlay of $68,132.

Difference between the two is a hefty: $16,732 over 5 years.

That means that if you get it right you would be saving up to $278.86 per month, every month, for the next 5 years. Quite a saving and demonstrates the difference between the extremes.

Comparing the cheapest with only the tenth lender on the list also gives a surprisingly high amount of money saved.

The tenth cheapest lender came in at $884.62 per month giving a total outlay of $54,518.

A difference of $3,118 over the 5-years, which is still the equivalent of $51.96 per month moreover the 5 years. So real savings and it’s free to find out.

So if you’d like to find out if you could improve on your current arrangements just call 01626 337722 or arrange a free call back.

Sometimes playing one off against another can pay

Sometimes the best thing is just pointing you in the right direction. For example:

Mrs D (name withheld), ¬†contacted me towards the end of 2007 for a mortgage review. She’d been contacted by her existing lender advising her what they could offer when her existing fixed rate deal ended.

There was nothing wrong with the mortgage rate on offer, which in fact was competitive, but her lender wanted to charge her a $1,500 fee to go onto the new one. Following the review, she was able to obtain an alternative that was slightly cheaper over 5 years. But it got better.

Confident that she had a viable alternative, Mrs D called her bank to let them know that she would be changing lender unless they could “do something” about the $1,500 fee. In this instance, rather than lose Mrs D for good, they waived their $1,500 fee!

Now obviously no one can promise the same result but a little help can make a difference. One thing I do ask of you is that you provide me with accurate information to save wasting time and resources comparing the wrong data.

Let’s take a look at the ways a mortgage gets repaid.