People who don't remortgage - is there ever a good reason?

RainbowsInTheSpray

Wow!

Just remortgaged away from Abbey at £890/month and just received a crossover letter from them saying it would have gone up to £1015.

I'm now with another lender fixed at £630 for three years.

Yes, I know it's a gamble, but.... phew!!

leftieM

People just don't bother! My sil and her husband will travel the length of the country to save a few pence on their groceries but sat at their lenders SVR for about 6 years (they remortgaged recently but not to save money - they were moving from an interest only to repayment). I told them about this site but they have their way of doing things and aren't interested in changing.

Gorgeous_George

Sometimes, the savings per month are outweighed by the cost of transferring the mortgage.

The OP does not say if the term was the same or if the new mortgage has been rescheduled over more years than the original one had remaining. No mention of fees (admin fees, arrangement fees, legal fees, survey etc.).

Crucially, the OP does not mention whether or not the new fixed deal has a tie-in beyond three years. If it does, this could cause problems in 2009.

Lethargy is, of course, the main reason people stay with current lenders. That and a false sense of loyalty.

Personally, I moved to a flexible tracker at BR + 0.74% which suits my circumstances rather well. With savings equivalent to 50% of my mortgage, the impact of any increases in mortgage repayments due to IR rises are off-set by the equivalent increase in IRs that the savings attract.

I find that the New Year is a good time to review one's finances.



GG

RainbowsInTheSpray

Gorgeous_George wrote:

Sometimes, the savings per month are outweighed by the cost of transferring the mortgage.

The OP does not say if the term was the same or if the new mortgage has been rescheduled over more years than the original one had remaining. No mention of fees (admin fees, arrangement fees, legal fees, survey etc.).




GG

Well, total costs were below £1000 and it seems I'm going to make that back in under 3 months. The tie-in is for the three years. What else can I say?

Ian_W

But to answer your question, which GG alludes to - YES, there are good reasons for not remortgaging if the cost of doing so outweighs the savings that can be made.
For example, towards the latter stages of a repayment mortgage when the capital outstanding is getting below £20K, or so, the fees involved might well be more than the amount saved on monthly repayments over the term of the deal even with quite a difference in % int rates.
However if the question was "is there ever a good reason not check?" my answer would be an unequivocal NO. I'd be in good company too, Martin reckons it's probably the biggest saving many people can make.

MarkyMarkD

Yes, there is a very good reason for not remortgaging if your mortgage is with a lender which allows you to choose the same products as new borrowers can get (i.e. not Abbey!).

If that applies, then you can often switch products with your existing lender without the hassle or cost of remortgaging to another lender.

I don't understand leftie's sister-in-law remortgaging just to change repayment method - any lender will let you change this for a minimal charge.