Can you really save money by rearranging your mortgage every few years - or is it all a con perpetuated by lenders and brokers to bolster their profits?
The short answer is "yes", you can save money.
In many cases borrowers can save thousands of pounds, maybe tens of thousands, over the term of their mortgage by moving around from lender to lender to take advantage of cheap deals.
However, before you rush off to the nearest broker there are some important points to consider and pitfalls to avoid.
Important costs
First of all there are costs involved in moving your mortgage.
"The first thing to do is to estimate the likely costs involved in moving your mortgage"
The lender will want to have your property valued by a surveyor, you will probably need a solicitor and the new lender is quite likely to charge you an arrangement fee.
The first thing to do therefore is to estimate the likely costs involved in moving your mortgage.
Both legal fees and valuation fees vary depending on the value of your property and the size of your mortgage.
As a guide, for a mortgage of £100,000 on a property valued at £250,000 you could expect to pay £350 in legal fees and £250-£300 for a valuation.
In addition to these costs the new lender is quite likely to charge you an arrangement fee which could be anything up to about £600 - even more in some cases.
So, on the face of it you will need to allow at least £1,000 to cover your fees. You then need to decide if the saving you will make by getting a lower interest rate will make the deal worthwhile.
Crucial comparisons
You can do this by comparing the total monthly repayments for the new mortgage with your existing mortgage, taking into account the period of time you are likely to have the new mortgage for.
Once you have done this you are armed with the first piece of information you need.
However, before proceeding you should talk to your existing lender to see if they are prepared to offer you a better deal, as many lenders, when faced with losing a customer, will suddenly find a better deal to offer you.
This will not only save you money on fees but also the headache of dealing with the transfer.
You should also have a look at new "fee free" deals which are on offer from some of the lenders.
These will generally offer to pay the legal fees and valuation fees associated with the re-mortgage and can be particularly attractive for smaller mortgages where the costs can easily outweigh the saving.
Potential penalties
In the event that your existing lender is unhelpful and you decide you still want to move your mortgage there are a number of other points to consider:
New safeguards
Although this all sounds somewhat complicated, any lender or broker you go to now is obliged to provide you with a Key Features Document.
This will outline all set-up costs as well as monthly costs for the mortgage they are recommending. This has to be in a standard format so it is easy to compare one deal with another.
Finally, look out for the standard of advice you are getting from whoever you are talking to. Whether they are a broker or lender they have to provide you with what is called an Initial Disclosure Document.
This is an important document as it will outline the level of service they are providing. This can be anything from information on a range of products (allowing you to select the one you like) to advice and information on products from the whole of the market.
The important thing to remember here is, that unless you go for a full advice service, you will relinquish your rights to claim compensation under the Financial Services Compensation Scheme in the event you subsequently find you have been sold an unsuitable product.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~22~RS~)