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Remortgage 101

Monday night’s Martin Lewis’ Money Show airing on ITV at 8pm (Monday 11 December 2017) will focus on everything to do with mortgages and specifically how millions of Britons could save by switching from their lender’s variable rate to a fixed rate.

You can watch the money saving guru in action here and use this short guide to find out more on how to save thousands of pounds by remortgaging.

In this guide you will find out:

  • What is a remortgage?
  • Who should remortgage?
  • Why should I remortgage?
  • When should I switch?
  • How do I remortgage?

What is a remortgage?

When you remortgage, you take out a new mortgage on the property you currently own. This is either to replace the mortgage you currently have, or to borrow money against your property. For most people, remortgaging is usually done when they automatically get moved from their fixed rate (which they have for 2, 3 or 5 years), to their lender’s typically more expensive standard variable rate (SVR).

Who should remortgage?

According to our research almost 2 in 5 (39%) Brits with a mortgage have not changed their product in the last five years, with 13% of these never doing so. Given most people fix for a maximum of 5 years this could be a big drain on household finances. There are estimated to be 4 million households in the UK on their lenders Standard Variable Rate, after their initial rate has expired.

Why should I remortgage?

The UK Average SVR rate is around 4.56% which means most people on pay £427.13 per month. Fixed rate mortgages are much lower – Habito’s remortgage customers average interest rate was 1.79% meaning an average monthly payment of £162.59. This gives the average Habito customer a saving of £264.54 a month, but for many homeowners, this could be even more.

HSBC estimated that homeowners on an SVR could save an average of £4,000 per year by remortgaging to a fixed. Since the Bank of England’s rate rise on  November 2nd the cost of not remortgaging has gone up a further 0.25% or an additional £20 a month on average, per household.

When should I switch?

Firstly, it’s a good idea to find out when your fixed rate finishes.

Most people don’t realise they have been moved on to their lender’s SVR until they check their bank statements and see a hefty increase in monthly mortgage payments. If this is the case with you, your introductory period might be up already. If so, then it’s time to head over to Habito and start the remortgaging process.

If you are still on your lender’s introductory rate, you should start the remortgaging process 3-4 months before it ends.

How do I remortgage?

These are the key things that happen when you find a new mortgage lender through Habito. As well as saving money and time you will:

  • Get your property valued
  • Submit your mortgage offer through Habito
  • Once your case is agreed you will receive a mortgage offer from the lender to confirm you are ready to transfer your mortgage
  • Once that’s done, the solicitor will handle the transfer of deeds from one lender to another and they transfer money and deeds
  • At completion, a letter will be sent through for you to sign
  • Receive a letter from the new lender confirming that your mortgage has been transferred
  • Your new mortgage payment will be taken based on your requested date and account details.

That’s all!

So what are you waiting for?

Watch the short video below to see how Habito works and how we can save you money!

Ready to get a free quote online? Click here to get started.

43% of Mortgage Holders Paid More This Week – Did You?


This week sees the first mortgage repayments made by UK consumers under the new Bank of England interest rate of 0.5%. The increase, from 0.25%, was the first rise in over a decade and will mean monthly mortgage payments just got more expensive for 43% of UK mortgage holders.

The rise is set to cost an average household on a variable mortgage an extra £20 a month, which over 12 months amounts to £240 a year – a pretty unwelcome expense coming ahead of Christmas and New Year.

But, if you are on your lender’s standard variable rate, you should be able to switch on to a fixed rate and save thousands in the process (before the rate rise HSBC estimated that by switching to a fixed rate households could save £4,000 a year!).

Here’s our 7 ways to get the best remortgage deal:

  1. Timing is everything

It can take time to switch on to a new mortgage rate so you should start looking roughly 14 weeks to three months before your current rate expires. Planning ahead will save you being automatically transferred onto a more expensive variable rate mortgage. Likewise, if you switch too soon, some mortgage products will include an early repayment charge. This charge can be as much as 5% of your outstanding loan, which can add up to several thousands of pounds. If there is a charge, arrange for the remortgage to start the day after the penalty period ends on your current deal.

  1. Don’t be drawn into the lowest rate

The lowest interest rates and seemingly cheapest deals are used by banks and lenders to market to customers, but they typically have larger fees – some over £1,000, which increase the overall price of the mortgage. It is better to look at the total cost – taking into account any associated fees and special offers, as well as the rate, to get the cheapest deal overall.  

  1. Look out for freebies (and what they really cost)

Many mortgage products now come with free valuations, no legal fees, the promise of cashback and more. But these usually come with higher interest rates – so they could still work out as more expensive overall compared to a product that has a lower rate but higher fees and no free services or cashback rewards. Be savvy and look at the cost of legal fees vs cash-back offers to see which is the bigger incentive. With some cashback products paying as much as £500, you could be better off taking the money and still spending on associated fees.

  1. In this market, don’t be scared to fix

Two-year fixes usually offer the lowest fixed interest rates, but after the bank of England increased its base rate and with more rate rises anticipated in 2018, many people are now looking to lock into the current low fixed rates for longer. Opting for a 5-year fixed rate product could be a good strategy to keep your mortgage payments consistently low and avoid any further rate surprises until 2022!

  1. Hold off on applying for a loan or credit card

Any lender will need to know that you’re sensible with your money and can afford to make repayments on your mortgage. So, in the weeks and months running up to applying to a remortgage, it makes sense to manage any existing debts and hold off applying for extra credit cards or loans, to get the best credit score and unlock the best mortgage deal for your needs.

  1. Beware of the loyalty trap

Rather than staying with your incumbent lender or current bank account provider, it pays to shop around. There are over 80 lenders in the UK and many offer lower rates for new customers than they do for existing customers. If you do find another lender with a better deal, don’t fear the break-up admin. Your new lender will appoint solicitors and talk to the old lender to switch your mortgage for you at no extra cost.

  1. Be smart with your time and your money – use a (free) broker

A broker can help you navigate the mortgage market minefield, make the application for you and chase the lender on your behalf – saving you hours of time and heaps money. Brokers usually charge £200 – £400 in fees, but there are brokers out there, including Habito, that offer their services for free and without the need to take any time off work to meet face to face. Take up the offer of impartial online mortgage advice – it doesn’t need to cost you a thing.

So what are you waiting for?

It’s more important than ever to secure the best deal you possibly can on your mortgage and we have invested in the technology to do it record time and with minimal form filling. Get in touch and let us free you from SVR hell – before December’s mortgage repayment comes out of your current account!

First-Time Buyer Stamp Duty Savings Guide

The big Budget statements have been made, and first-time buyers have been granted stamp duty relief on properties up to £500,000. This is great news for those looking to get on the property ladder, but you might be wondering how the savings stack up compared to previous stamp duty regulations. 

The Big Red Briefcase

Chancellor Philip Hammond announced a raft of changes to the government’s approach, and directed funding at the housing market. This was summed up with his pledge to invest a whopping £44 billion pounds over the next 5 years to stimulate the housing market in Britain.

What is Stamp Duty?

At the centre of the housing budget were changes to stamp duty for first-time buyers. Stamp duty, known as Stamp Duty Land Tax by the government, is a form of tax paid when purchasing land or property. Previously, all purchases of primary property were subject to tax on the value of the property that fell into each tax band. Stamp duty is payable within 30 days of the completion of the sale, and paid to HMRC.

What does this mean for me?

The new changes mean first-time buyers will not pay any stamp duty on properties up to £300,000. This is fantastic news for first-time buyers, who on average spend £207,693 on their first home. This means the majority of first-time buyers won’t pay a penny of stamp duty on their first home, saving an average of £1,650.

For first-time buyers in London, this stamp duty change will also provide relief, where the average first-time buyer spends £410,000 on their property. The new stamp duty relief covers properties up to £500,000, meaning first-time buyers will only pay stamp duty on the £300,000 -£500,000 portion of the property. This means those buying a property at £410,000 will pay £5,500 in stamp duty, saving £5,000 in comparison to the previous regulations.

Check out our Habito Stamp Duty Index to see the effect of the new regulations on the cost of homes for first-time buyers:

Who should I speak to?

With relief on stamp duty, and more first-time buyer products on offer, now’s the time for those looking to get on the property ladder to make a move. Habito is here to help you every step of the way, with a team of friendly mortgage experts on hand to answer any first-time buyer questions you might have, and guide you through your application.

The first step is using our clever Mortgage Illustrator, which can give you an idea of how much you could expect to borrow, including which mortgage product might be right for you, in a matter of minutes. All it takes is some simple information about yourself, without any credit checks, to get a picture of what your mortgage might look like.

From there, our mortgage experts can advise you on products and rates, and help secure the best possible deal for you. Head over to Habito now to find out if you could be in with the chance of saving on your first home, and let us help you find mortgage harmony.

Credit to Stefan Rousseau - WPA Pool/Getty Images

Stamp Duty Abolished For First Time Buyers

 

After weeks of speculation about the Autumn Budget, the fiscal facts are finally on the table. Philip Hammond has just finished laying out his plans to the House of Commons, and here at Habito we’ve been keeping a very close eye on the action. All in all, the Chancellor’s Budget speech paints a hugely positive picture if you’re looking to buy your first home. Read on and find out why.

Massive savings on stamp duty

Thanks to rocketing property prices, particularly in London and the South-East, stamp duty has been raking in massive revenues for the government but also helping to stall the UK housing market. The proportion of first-time buyers liable for the tax has risen from 47% in 2001 to a whopping 78% in 2017 – and that figure jumps to 100% in London. As a result, first-time house-hunters have been shying away from getting on the property ladder and empty-nesters have been staying put instead of downsizing to free up family homes.

What has the Chancellor promised?

The Chancellor has come up with a surprisingly sweet carrot to get young people to swap ‘Generation Rent’ for ‘Generation Own’. He has announced that, from today, first-time buyers will pay zero stamp duty on properties up to £300,000. For homes between £300k and £500k, first-time buyers will save £5,000 in stamp duty.

Pre-Budget, properties under £125,000 were exempt, but the average purchase price among first-time buyers in the UK stands at £207,693 – and £410,000 in London. So, the £1,700 you would have to stump in stamp duty on your £210,000 dream home will now be absolutely nothing! Good news for Londoners, who will save £5,000 in tax on a £410,000 home, paying just £5,500 in stamp duty. The new rules mean a stamp duty cut for 95% of first-time buyers, with 80% paying no stamp duty at all.

Habito happiness rating  ★★★★★

More land for new homes

The UK is in the middle of a housing crisis, with a chronic shortage of new homes being built each year, and Communities Secretary Sajid Javid piled on the pre-Budget pressure for the Chancellor to ‘think big’ and ring-fence £50 billion of public money for new homes. The benefits of getting Britain building again are clear – an influx of new homes would help to ease the housing crisis and rein in spiraling property price increases, allowing more first-time buyers to get a foot on the property ladder.

What has the Chancellor promised?

Mr Javid’s pleas have been answered by the Chancellor, who has committed £44 billion to provide funding, loans and guarantees over the next five years to boost the UK’s housing stock. He told Parliament that the crisis needed ‘money, planning reform and intervention’, so how will the £44 billion figure break down? Money to deliver 300,000 new homes each year by the mid-2020s (up from the current 217,000), training young construction workers and guaranteeing loans for small house-builders to get their hard hats on pronto. The Chancellor also announced planning reform to free up more urban brownfield sites for residential development, and intervention on the vast number of planning permissions currently left unbuilt. But one thing not to expect is flats in fields – the Green Belt will remain gloriously green.

Habito happiness rating  ★★★★☆

Help to Buy scheme extended

Aimed at young house-hunters, Help to Buy launched in 2013 and allows you to buy a new-build property with just a 5% deposit – the government lends 20% of the sale price and you borrow the rest via a repayment mortgage. The scheme has been hugely popular and already accounts for more than a quarter of all new-build sales in the UK, 81% of which are to first-time buyers.

What has the Chancellor promised?

The Tories are targeting the young vote, and Theresa May already used the Tory Party conference in October to announce a government injection of a further £10 billion into the Help to Buy scheme, allowing another 135,000 people to buy a new-build home by 2021. The Chancellor used his Budget speech to reconfirm that figure – but where all that extra money’s going to come from is yet to be revealed.
Habito happiness rating  ★★★☆☆

Habito’s point of view

The Chancellor’s pre-Budget intentions were clear: “We will not allow the current young generation to be the first since the Black Death not to be more prosperous than its parents’ generation. Fixing the housing market is a crucial part of making sure that doesn’t happen.” Strong words indeed, and Philip Hammond has followed through with a wide range of homebuyer reforms that mean it’s a brilliant time to put your foot on the property ladder. Stamp duty cuts, new-build investment and a boost for Help to Buy will all help the housing market back to good health.

Kala, our VP Operations, recommends you chat to our friendly team of mortgage experts sooner rather than later:

Today’s stamp duty reforms will turbocharge the first-time buyer market, allowing people to save thousands and put more money towards a deposit, giving them access to a wider range of mortgages. However, it is also likely that house prices will rise, as there could be a rush to take advantage of this tax change on houses below the £500,000 threshold.

The number of properties bought and sold from now until January is usually low. But with the increase to the base interest rate by the Bank of England this month, as well as continued competitive prices on offer from mortgage lenders, it’s likely we’ll see a boost in house buying, based on first-time buyers rushing to take advantage of this change to stamp duty.”

So stop dreaming and start doing your sums, and hop on to live chat to speak to one of our mortgage experts. Habito is here to help you every step of the way towards mortgage bliss, and there’s no better time to start your journey with us!

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