Avoiding the Dreaded Standard Variable Rate - Final Word!

At the moment there are no standards imposed on the mortgage industry for the time to turn around a mortgage application, though the Council of Mortgage Lenders think that most can be turned from applications into offers within two or three weeks.
If you go through a broker, it’s always worth asking them about the turn around times of the different lenders as they'll be reluctant to recommend lenders with slow turn around times as they stand to lose commission too if the deal takes so long you decide to go to another broker (or in the case of new house purchases, you lose the house you wanted to buy!)
So, the message is simple - have a diary system that tells you two months in advance when your mortgages are coming to the end of their discount period – and start shopping around (and making applications) right then.
Alternatively, if you are lazy like me, just opt out by getting a lifetime or long term base rate tracker where the interest rate is reasonably good.
OK, it may not be as good as some special shorter term discounts but at least you can forget about having to remember to re-mortgage to keep off the dreaded standard variable rate every few years. Back to main site: www.lettingfocus.com
Copyright: David Lawrenson 2007

Avoiding the Dreaded Standard Variable Rate - Part 2

Two days ago I wrote about why it's important to keep track of your mortgages to avoid going on the lender's standard variable rate for long.
It should be noted that processing delays and admin problems at mortgage lenders are common and often result in buyers paying several months of unnecessary interest charges as they wait for their mortgage applications to go through.
Of course, the delay is longer if you are switching away from your current lender to a new one, rather than just re-mortgaging with the same one as I was doing.
My mortgage broker friends tell me that there can be particular problems when a smaller lender comes out with a really attractive rate - and is then inundated with applications and doesn’t have the administrative resources to handle the demand.
In fact brokers say this is becoming an ever more regular issue because what often happens is that lenders will have a small bundle of funds bought at a really attractive interest rate on the money market to offer out. Often this may be as little as £12m of funds which is often taken up by brokers in days and fully sold out.
Naturally, the lender goes to the top of the “Best Buy” charts but is swamped with a backlog which takes ages to process, thus leaving customers who are re-mortgaging stuck on less than attractive standard variable rates for months.
Copyright: David Lawrenson 2007
Back to main site: www.lettingfocus.com
Next post will be on Monday12th Feb

Parts Of Thames Gateway Are Swimming in Buy to Lets

Interesting to see on BBC's "Working Lunch" today that at least one part of the Thames Gateway is full of buy to letters.
I predicted this about 9 months ago when I wrote up on the area around Ebbsfleet for a property website.
Back then a few agents had told me that the only people buying in the area were buy to let investors.
Now Ebbsfleet is a great station with great connections but I see lots of new properties and not much in the way of jobs locally yet.
And if a lot of the new build is being gobbled up by investors and then let out, I still think this is one area to avoid - for now at least.
Copyright: David Lawrenson 2007
Back to main site: www.lettingfocus.com

Keep Track of Your Mortgages to Avoid the Dreaded Standard Variable Rate

About two years ago I lost a file with the dates when my mortgage deals would come out of their special rates and onto the lender’s dreaded “standard variable rate.”
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.
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, now, I’ve got to 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!
Copyright: David Lawrenson 2007