Avoid Standard Variable Rates says LettingFocus.com
I forgot all about it and a year later I got letters from two of my mortgage lenders that went like this: “Dear Mr. Lawrenson, the special discount deal you took out three years ago is coming to an end, so we are now delighted to tell you that you will now go on to our "special" standard variable rate with effect from the next monthly payment.”
Oh dear. For the one mortgage, the standard variable rate (SVR) was 1.75% above the Bank of England base rate. For the other it was 1.5% above base rate.
Of course, no one with any sense pays these rates because right now there are better deals around.
Back in the Market
So, of course, I was back in the market for another decent deal but because I hadn't planned ahead, I ended up paying the SVR for a month .
In both cases, I ended up remortgaging for the same amount with the same mortgage lender but with a much more favourable rate for another three years.
Of course, this time I'll definitely remember to switch again three years hence! And this time I have backed up the file and written a reminder in big letters on my wall!
Base Rate Trackers
A broker I know has said that there should soon be some good Bank of England base rate tracking mortgages around too.
These will be worth looking out for and perhaps getting onto because it will surely be that the great deals we are seeing in the mortgage market today won't last forever .
And when these current great mortgage deals have gone, you may well be happy that you paid a bigger fee now to get on a lifetime tracker.
I remember how 10 years ago, in 1997, when my property investing business really took off, the typical mortgage margin over the BOE base rate on buy to let was 2.5% or 3%. It's not impossible that tighter credit conditions could one day return and these kinds of rates become the norm.
Worth thinking about!
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Labels: base rate mortgage trackers, buy to let mortgage, buy to let mortgages, Standard Variable Rates
This entry was posted by lettingfocus, on
Monday, February 05, 2007.
