Once upon a time, people used to organise a mortgage, often through the estate agent who’d sold them the property and generally remained faithful to that building society throughout the term of the mortgage. Back in the 1970’s it was quite usual for couples to save up for their deposit with a particular building society in order to be looked on favourably when the time came to apply for a loan. The only time they’d have cause to change things was if they moved house and then they only tended to arrange a replacement mortgage with the same company.

Things have certainly changed since then. There are a great many more building societies all competing for your business. It has become the norm to switch between building societies on a regular basis in order to gain the best possible rates. It’s very much easier now. Specialist on-line brokers can offer all the help and choice that you need and it’s no longer the mystifying process it used to be.

There are an unbelievable number of mortgages available and flat rate “lifetime” loans are now becoming available at lower rates. Are they really going to save you money in the long term though?

As an example, we have details of a lifetime tracker mortgage from the Woolwich. Based on an interest charge which is guaranteed to remain at 0.19 percentage points over the Bank of England’s base rate, which means a current rate of 4.69 per cent. There is no need to change after two years; the rate will automatically adjust according to bank rate.

Compare this with an offer from the Portman Building Society. They offer a two year discount mortgage. Their rate is 4.19 per cent.

There is no application fee with the Woolwich; neither do they charge legal or valuation fees.

Compare this with the Portman. There is an application fee of £499, a charge for valuation in the region of £300, legal fees of approximately £350 and a deed release fee of £199

If you have a £150,000 mortgage you will save £1500 over two years by using the Portman versus the Woolwich. However, the costs shown above bring this figure down to £152.

At the end of the two years, it will be necessary to re-negotiate another deal as good as, or preferably better than, the current Portman one, as if you don’t move fast, a 6.5 per cent rate kicks in and that will cost you £226 per month more than the Woolwich loan. So watch those dates!

Your loan requirements may be considerably more than £150,000 and in this case you will certainly be far better off by shopping around.

The mortgage market is ever-changing and keeps everyone on their toes in search of the best deals, but on balance it appears that a good on-line broker seems to be the best way to go. Sit back and let them do your homework for you every couple of years. They have a vast amount of experience of the mortgage market and will pull out all the stops to make sure you get the best possible deal.

So, that’s the story. Make the right choice and you’ll all live happily ever after!

Mortgage Detective is an exclusive uk based website offering life insurance and mortgages to UK residents.

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