Remortgaging - to switch or not to switch?
Mortgages are devilishly complex to set up, and for most of us,
once we've got the mortgage all sorted, we're quite happy to
leave it that way. However, there's a new breed of borrower,
called (not very affectionately) 'rate tarts' by the mortgage
lenders, that look around for better deals and switch mortgages
when they please.
They're making the most of a very competitive market, in which
mortgage lenders are offering lower and lower interest rates to
get borrowers through the door. It makes sense to switch
mortgages if there is money, possibly a very significant amount,
to be saved.
To combat this growing trend, some mortgage lenders have decided
to up the ante, accompanying extremely low interest rates with
ridiculously high set up fees. This is a double-edged sword
because although it increases their profit margins, it reduces
the lender's market share.
Here's a good example of this practice: Birmingham Midshires.
They have a 3.89% two year fixed deal on the market at the
moment. But yes, it is too good to be true. A closer look at the
small print and the arrangement fee is quoted at