Consumer champion Martin Lewis explained how concerned homeowners can find the cheapest mortgage rates amid the hike.
Mortgage rates today hit the highest level for 15 years today - surpassing the peak in the aftermath of the Mini-Budget. The average rate now on a two-year deal is 6.66 per cent.
This level has not been seen since August 2008 during the financial crisis and mortgage rates have soared off the back of thirteen consecutive interest rate rises in a row by the Bank of England, with the base rate now at five per cent, as the Mirror reports.
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In a special last minute edition of the Martin Lewis Money Show Live on Tuesday evening, the financial guru ran through how to check for the best rates.
First of all, he advised homeowners to gather all the relevant information about their current mortgage deal.
He said: “Find out the rate, the type, when your fix ends, if it’s a fix. The term, how long your mortgage will last, any early exit penalties for clearing it.
“Most importantly for everybody out there, you need to know you’ll move to the standard variable rate.”
You will normally be moved to your existing lender’s standard variable rate (SVR) when your existing fixed or tracker deal comes to an end.
But the typical SVR rate right now is 8 per cent - which is more expensive than the average fix or tracker.
“You don’t want to be on an SVR,” warned Martin. “If you possibly can, you want to get off that, so you need to know when you’re going to be moved to that.”
Martin went on to explain the other crucial thing to know about your mortgage, is your loan to value (LTV). That is the proportion of your home’s current value that you borrow.
“The mortgage deal you can get, tends to be cheaper, the lower your LTV, the less you’re borrowing,” said Martin.
“It specifically tends to be around 90 per cent, 80 per cent and 75 per cent until 60 per cent - then it doesn’t get any cheaper. So if you’re just above those thresholds and you have savings… then you want to push down to that next possible threshold if you can because you might get a cheaper rate.”
Once you have all your mortgage details, Martin explained how it is time to start looking at what other deals are out there.
“The first thing you want to be looking at is - different to what I would have said five years ago - is check your existing lender’s product transfers,” he said.
“This is where you get a new deal from the same lender. It used to be a poor route, it used to be expensive, but lately they’ve offered competitive deals.
“It can mean less paperwork, fewer fees and they don’t have to do affordability checks on existing customers. Once you know - you’ve got your benchmark - this is what my current lender can offer me - what’s the best on the market?
“The mortgage deal you can get, tends to be cheaper, the lower your LTV, the less you’re borrowing,” said Martin.
“It specifically tends to be around 90%, 80% and 75% until 60% - then it doesn’t get any cheaper. So if you’re just above those thresholds and you have savings… then you want to push down to that next possible threshold if you can because you might get a cheaper rate.”
Once you have all your mortgage details, Martin explained how it is time to start looking at what other deals are out there.
“The first thing you want to be looking at is - different to what I would have said five years ago - is check your existing lender’s product transfers,” he said.
“This is where you get a new deal from the same lender. It used to be a poor route, it used to be expensive, but lately they’ve offered competitive deals.
“It can mean less paperwork, fewer fees and they don’t have to do affordability checks on existing customers. Once you know - you’ve got your benchmark - this is what my current lender can offer me - what’s the best on the market?
