MARTIN Lewis is urging homeowners to fix their mortgages now as it could save them thousands of pounds.
This is because five-year fixed rate mortgages have fallen to their lowest level since March last year, while two-year fixes have dropped too.
ITV Now could be a great time to get a new mortgage deal, says Martin Lewis
“The cheapest five year fixed-rate mortgage is 1.79 per cent, which is seriously cheap and two-year fixes are as low as 1.39 per cent,” the money guru wrote in his weekly MoneySavingExpert newsletter today.
“Of course that doesn’t mean they can’t drop further, but there’s not that far to go, whereas there’s a lot of room for them to rise,” he added.
Martin says uncertainty around Brexit and competition among mortgage providers has helped ramp down the rates.
In other words, right is a great time for existing homeowners to check if they can save by fixing their mortgages.
PA:Press Association If you’re on an expensive SVR rate, you can save a lot by switching
But Martin does warn potential buyers that now may not be the best time to buy.
He said: “Yet that’s not the same as saying it’s a great time to buy or change a property – uncertainty could see property prices swing.
“Though as no one has a crystal ball, if you’re buying your first home, provided you’re not overstretching and it’s the right property, you may as well get on with it.”
Huge savings are possible, especially if you’re one of the two million Brits who are on their lender’s standard variable rate (SVR), which is the rate most fixes and trackers revert to after an introductory deal.
These rates are often much higher, with Coventry Building Society, Santander, Virgin Money and Yorkshire Building Society all charging interest of 4.99 per cent, according to MoneySavingExpert.
Meanwhile, other banking giants such as Barclays, Lloyds, NatWest and Nationwide charge 4.24 per cent in interest.
This means that someone moving from a £150,000 mortgage with 20 years remaining at a 4.24 per cent interest rate, to a five-year fix at 1.79 per cent will save about £10,000 over five years.
That’s after taking the £1,499 fees into account, and is based on an existing mortgage deal with a loan to value (LTV) of 60 per cent.
For tips on how to find the best mortgage deal for you, check out the box below.
How do you find the best mortgage deals?HERE’S how to ensure you get the best deal on your mortgage or remortgage:
Websites such as MoneySuperMarket and Moneyfacts have mortgage sections so you can compare costs. All the banks and building societies will have their offers available on their sites too.
If you’re getting confused by all the deals on the market, it might be worth you speaking to a mortgage broker, which will help find the best mortgage for you.
A broker will typically cost between £300 and £400 but could help you save thousands over the course of your mortgage.
You’ll also have to decide if you want a fixed-deal where the interest you’re charged is the same for the length of the deal or a variable mortgage, where the amount you pay can change depending on the Bank of England Base Rate.
Remember, that you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statement.
And while you might be tempted to get a mortgage without a deposit, they tend to be more expensive than other deals, so you could be better off saving up instead.
You can check out our guide to the best first-time buyer mortgage deals here.
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