MoneySavingExpert.com Found and Chair Martin Lewis recently commented on mortgages with less than 1% interest, pointing out their benefits and drawbacks.
HSBC recently created headlines when it launched a two-year fixed mortgage at 0.99%, but Lewis said in a June 2016 MoneySavingExpert.com article that this mortgage would not suit everyone, as there was fee of £1,499 and it was only available to people with the top credit score. Applicants can only borrow up to 65% of a home’s value.
All this means that assistance from a residential or commercial mortgage advisor could be valuable before committing to a decision.
Lewis said that this sub 1% mortgage was a sign of high competition between lenders. Though there is the possibility of the average mortgage rate dropping further, Lewis said that it may not be wise to wait. He advised remortgaging to a cheaper rate sooner rather than later, saying:
“Mortgages are at historically cheap rates already. If you can slash £1,000s off your cost and get peace of mind that you can afford it (and if you’re worried about uncertainty, go for a longer fix) then do it. Yes, there’s a chance it could get even cheaper, but if you’re bagging something that’s easily affordable, that safety and certainty has a value too. Playing the market is never a sure-fire win.”
Martin Lewis advises mortgage borrowers to consider several factors to decide if a remortgage deal will save money. These include looking at the interest rate, the type of mortgage, the length of a fixed rate deal, how long the mortgage is for, and where there are any early-repayment or exit fees.