What to do when your mortgage is up for renewal

What to do when your mortgage is up for renewal

Renewing Your Mortgage Deal

Renewing a mortgage deal must rank high on the list of many people’s most unpopular financial tasks. While it makes obvious sense to look into the matter, it is so much easier to avoid the issue altogether. The incentive is particularly low with mortgages as there are no immediate negative consequences to doing nothing. You continue to pay your monthly instalments as before, but you may be paying more than you need to without knowing it.

Why it is Good to Take Action

It is most likely that for a time-limited mortgage deal your mortgage provider has been shown off to best advantage. To attract new customers, banks and building societies will offer enticing packages with low interest rates and other additional incentives. However, whenever the time-limited deal runs out, the mortgage provider will start to apply their standard rate for lending, which will always be higher than their best deals. If you do nothing and let your provider move you on to the interest rate they set themselves, you will inevitably pay more than you need. Therefore, reviewing your mortgage at the point of renewal is really important to guarantee getting the best deal.

When to Start Reviewing

Clearly it is good for banks and building societies if customers make no effort to get the best deal for themselves. It is the customer’s responsibility to be on the ball and know exactly when their existing deal runs out. Astute customers will set reminders in their calendars in case they forget the date and start looking at their options up to 6 months before their current deal comes to an end. Of course it takes time to acquaint oneself again with current offers and interest rates in the mortgage market every few years when the time for mortgage renewal comes round again, but doing so may save a considerable amount of money.

Doing Nothing will Cost You Money

Customers should start early to learn about available deals, as it will be much easier to take action when the time for mortgage renewal arrives. It takes a while to evaluate and compare the best deals available instead of simply going for the first attractive offer. But the time customers invest in finding the best deal for themselves may pay real dividends. Even though the difference in the amount of money you save finding a better deal compared to the existing one may be small, over the extended period of an average mortgage customers can save a significant amount of money.

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