Slow and Steady

Something to try sometime soon

Posted on: July 22, 2009

Copied from the weekly MSE email

Haggle down the cost of your existing mortgage
Cut mortgage costs even if you’re locked in?

A MoneySaver recently fed back to me how he asked for a rate reduction on his fixed deal (during the lock-in period), and got around 1% off, that’s £80 a month cheaper per £100,000 of mortgage. There’s no way to tell how widespread this is, and it’s UNLIKELY to work for most, yet there’s no harm trying.

What to do…

* Check your current contract. Don’t assume you’re automatically locked in; some fixed and discount rate deals are penalty free, meaning you can leave at any time. And those paying standard rates are usually free to move anyway (see the remortgage guide or speak to a whole-of-market broker).

* Be polite but have an argument ready. If you are locked in, before you call to haggle, check what your lender currently offers new customers, and prepare an argument for why you should get a reduction. E.g. “I’ve been a loyal customer for years, but my rate’s way above everyone else’s, what can you do to help?”

* Use the ‘should I ditch my fix?’ calculator. If your lender won’t let you move penalty free, and you’re on a fixed rate, it’s UNLIKELY to be worth ditching, though you can do a rough calculation with the ditch my fix? calculator.

What not to do…

* Don’t lock in when there’s little time left. Those who get a reduction close to a mortgage deal’s end may be missing out on the opportunity to see what better deals are available elsewhere, and potentially paying over the odds. See the cheap mortgage finding guide for full info.

* Don’t forget fees. If you’re given any options, always check whether there will be penalty fees for leaving and setting up a new deal, then see whether with those incorporated you’ll still save.

* Don’t think cheaper is always better. If your existing lender offers you a new cheaper rate with a longer lock-in, you may be trading in short-term gain for long-term pain. It may be better waiting until your deal ends and you’re free to move.

* Don’t forget to feedback & share info. If you get anywhere, or discover a good technique, please report it in the forum thread mortgage haggling.

This is something I am most definitely going to try if I’m not eligible for mortgage help and have to rent out my flat.  They can only say no eh?


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