Beware the SVR mortgage trap

Tuesday, 2nd October, 2018

This definitely sounds more sinister than it really is, however the standard variable rate (SVR) mortgage trap surprisingly affects a high number of people every year.

It’s a bit like household energy deals or ISAs: you are drawn in by the competitive rates, be they cheap – and fixed – energy or a high rate of interest for the first 12 months, only to find yourself paying twice as much for home heating or receiving half as much interest as soon as that period is over.

It’s arguably more difficult to overlook increases in your monthly mortgage payments than it is the rate of interest on your ISA, generally because the stakes are higher and the increases more noticeable, however people do tend to find themselves on the SVR and subject to higher monthly payments – and there’s really no need for it to happen at all.

When it comes to finding yourself on your lender’s SVR rate, there are two scenarios:

a) You’ve sorted the mortgage and you’ve lost track of when your preferred mortgage rate ends and the SVR begins – and your lender either hasn’t reminded you, or they have, but you’ve put off sorting it for another day

b) You use a mortgage broker and they’ve failed to remind you to consider your options as you approach the end of what seemed like the best mortgage deal when you took it out 18 to 24 months ago.

As a Guildford mortgage broker the advice we have covers both points, and that’s don’t just use a mortgage broker – but a good mortgage broker.

Firstly, using a mortgage broker doesn’t mean handing over money to someone who you feel does just as good a job as you. In return for getting a mortgage broker to apply for a mortgage on your behalf, you will be working with someone who’s qualified, bound by stringent regulation and who often has access to the best mortgage deals on the market at any given time.

More importantly, in the context of the SVR trap at least, it takes the responsibility of keeping on top of your mortgage off of you and places it firmly at your mortgage broker’s door.

Secondly, good mortgage brokers should know your mortgage as well – if not better – than you. As a result, they should not only be aware of key dates, such as the date your mortgage is due to switch to the SVR, but also proactively contacting you with a list of options when it comes to doing something about it.

That’s what we do, at least, and it’s an approach that prevents the majority of Complete Mortgages’ clients from having to experience the SVR.

Don’t get caught in the SVR mortgage trap. Contact a member of the team at Complete Mortgages on 01483 238280 who can manage your mortgage on your behalf and make sure that you’re aware of all the best mortgage rates available to you in advance. Alternatively, email info@complete-mortgages.co.uk.

How to increase your chances of getting a mortgage

Saturday, 28th July, 2018
guildford mortgage broker

Firstly, this isn’t a cheat or a piece that advocates – or even encourages – you to try and pull the wool over a mortgage lender or broker’s eyes, and that’s for the very simple reason that it’s impossible and won’t work.

You will not be able to trick a lender into giving you a mortgage or awarding you with the best mortgage deal.

However, just as an athlete prepares for an event, there are a number of things that you can do to help get you mortgage fit. Here are a few pointers to get you started.

1. Score points with your credit score

One way a lender can check if you have what it takes to repay your mortgage and honour your commitment is to check if you have good credit history.

In general, your credit report is what it is and made up of a number of sources including credit card history, loans taken and overdrafts used.

Before you apply for a mortgage it’s worth checking to make sure it’s a) up to date and b) correct.

If you spot anything glaringly inaccurate then at least you have the opportunity to fix it in the short term before it scuppers your chances long-term.

2. No vote, no chance

If you’re not registered to vote than you’re unlikely to get a mortgage. This one’s really easy to prepare for, too. If you’re going to fall down at one of the hurdles then don’t let it be this one. Click here to register to vote.

3. Don’t let the past affect your future

Joint current accounts, loans and other commitments carry joint responsibility. If you’re linked to any of these via an ex-partner – and the ex-partner has defaulted on a payment or done something that would have a negative consequence – then you’re going to be affected, too.

The best way forward in this instance is to check if you’re still linked in any way and, if you are, get yourself disassociated.

4. Be careful with your credit

Just because you have a credit limit of £12,000 doesn’t mean you need to spend £12,000 on credit. At least that’s the view of lenders, who would typically prefer your overall credit card debt to be no more than 50 per cent of the amount available (the lower the better).

When it comes to credit card debt, then it’s better to pay it off – however don’t leave yourself with zero debt and huge credit limits; lenders worry that you may one day go one a huge spending spree!

5. Be diligent with your admin

We’ve all had accounts that we don’t use and rather than close them down, we’ve simply cut the associated cards up and thought that that was it.

Having multiple bank accounts open with nothing in them isn’t advisable, especially if the details attributable to those accounts are out of date and could be disadvantageous to you.

6. Don’t apply for credit just before you apply for a mortgage

The more credit searches you have on your file in a short space of time, the more chance a lender has of thinking you’re in desperate need of credit – even if you’re not.

We would advise that you get a mortgage before you get the new car!

7. Bills don’t pay themselves

So make sure you pay yours – on time.

Not paying a bill on time stays on your records for six years, so don’t let an innocently missed payment result in a missed mortgage offer.

8. Use a mortgage broker

This one really is simple.

As a Guildford mortgage broker, we see people battling with mortgage applications on their own day in, day out, all when they could let us do the legwork on their behalf. As mortgage brokers do this every day and know what’s required (and, importantly, what’s not) they can simply fast-track the process.

Why waste your time when you can hand it over to a professional!

If you’re thinking of applying for a mortgage, or if you’ve been struggling to get a mortgage, contact the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk. We can help with first time buyer mortgages, buy to let mortgages, commercial mortgages and adverse credit mortgages.

By Mark Finnegan, Director at Complete Mortgages