Martin Lewis issues warning for mortgage holders – how to find the cheapest mortgage after rates hit 15-year high
MARTIN Lewis has issued a warning for mortgage holders following a huge rate hike.
The money saving expert hosted a mortgage special on his Money Show on ITV this week.
It comes after interest rates spiked earlier this week to their highest level in 15 years for an average two-year fix.
The average rate on a two-year fixed mortgage soared again, this time to 6.66%, the highest its been since 2008.
It means that people coming to the end of a fix could be facing higher bills when they get a new deal.
Around 2.4million fixed rate mortgages are due to end between now and the end of next year, according to UK Finance.
Speaking on the show, Martin warned Brits not to avoid their banks or lenders if they run into financial troubles.
He said anyone finding it difficult to keep up with monthly mortgage payments shouldn’t try to hide it.
The consumer champion added mortgage holders should be given options and if they aren’t, they should make a complaint.
Martin said: “If you have serious problems or you’re in arrears, please speak to your lender if you are in trouble.
“Don’t hide it from them. That’s a mistake.
“Under the forbearance rules lenders should offer you tailored support – so that’s payment reductions [and] permanent term extensions.
“Now these can hit your credit score but they should be offered to you.
“And if they don’t then you can make a complaint.”
Martin also said that for people on a fixed rate deal, it’s important to check when it’s coming to an end.
He said anyone wanting to switch should get onto their current lender and see what they can offer before going elsewhere, as it could cost thousands.
Below we reveal how you can find the best deal on your mortgage.
How to get the best deal on your mortgage
If you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
But there are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio has changed this could also give you access to better rates than before.
A change to your credit score or a better salary could also help you access better rates.
If you have a fixed rate, you could see higher rates when you come to the end of the current term after 13 Bank rate rises since December 2021.
And if you’re nearing the end of a fixed deal in the next six months it’s worth contacting your broker now to lock in a rate.
If they come down between now and the end of your deal, you can always apply for another rate before you remortgage.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare for you, with most offering free advice to secure you the best deal for you.
Some brokers charge for advice, so ask them first.
It could cost a couple of hundred pounds but it might save you thousands on your mortgage overall.
You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember, if you decide to remortgage to a new lender you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
It’s possible to avoid new affordability checks by remortgaging to a new deal with your existing lender, providing you don’t want to borrow more or extend your term.
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