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<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML//EN"> <html> <head> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> <meta name="GENERATOR" content="Microsoft FrontPage 2.0"> <title>Untitled</title> <link rel="STYLESHEET" href="style1.css" type="text/css"> <base target="_top">  </head> <body bgcolor="#FFFFFF" topmargin="0" leftmargin="0"> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <tr> <td valign="top"><table border="0" cellpadding="0" cellspacing="0" width="100%"> <tr> <td align="right" valign="top" width="174"><a name="top"> </a> </td> <td align="right" valign="top"> </td> </tr>  <tr> <td align="right" valign="top" width="174"> </td> <td valign="top"><a><img src="mi_logo.GIF" width="200" height="36"></a> </td> </tr> <tr> <td align="right" valign="top" colspan="2"> </td> </tr>  <tr> <td align="center" valign="top" width="174"><img src="004008.jpg"><table border="0" cellpadding="0" cellspacing="0" width="138"> <tr> <td align="right" valign="top" width="138">C O N T E N T _______________ <A HREF=#1 target=_self>Reasons to Switch Mortgage </A> <A HREF=#2 target=_self>Moving House </A> <A HREF=#3 target=_self>A Change in Personal Circumstances </A> <A HREF=#4 target=_self>A Change in Legislation </A> <A HREF=#5 target=_self>Rate Changes and Special Offers </A> <A HREF=#6 target=_self>Guaranteed Rates </A> <A HREF=#7 target=_self>Cash-Back Options </A> <A HREF=#8 target=_self>Switching Costs </A> <A HREF=#9 target=_self>Consider all the Options </A>Expert A s s i s t a n t <SCRIPT LANGUAGE=VBScript></SCRIPT> </td> </tr> </table> </td>  <td valign="top">Switching Mortgages by <A HREF="money:navigate/guide/guide/010004.html">Caroline Whitehead</A>, specialist writer and adviser to leading UK financial institutions. Anyone who has entered into a mortgage contract will have understood that essentially it is a long-term commitment between the lender and the borrower. Provided the borrower keeps up payments, the loan is secure. Many people who took out a mortgage in the 1950s or 1960s will have remained within the same contract, in the same house, until the loan was repaid. However, the combination of a sharp rise in property prices in the early 1970s and an increasingly mobile population has led to a number of changes within the mortgage industry, not least of which is a greater demand for re-mortgages and more frequent switching of mortgages. <a name=1>Reasons to Switch Mortgage</a> There may be several reasons for changing your mortgage. Most are wholly justified, given the circumstances, but a few need serious consideration. <a name=2>Moving House</a> When you move house, it is normal to alter the terms of your mortgage contract. The proceeds from the sale of the property are usually sufficient to settle the outstanding loan and the customer takes out a new mortgage for the new property, sometimes with a new lender and certainly under new terms. If the existing mortgage lender still has a range of competitive options, it is definitely worth considering staying with them. They will know your payment record, they will probably be more willing to offer a good rate and most certainly they would be more tolerant of any future difficulties you may have in meeting your obligations. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A></td></tr></table></td><td align=left valign=top><a name=3>A Change in Personal Circumstances</a> Similarly, if a borrower undergoes significant change in his or her circumstances, there may be a good reason to change a mortgage. Getting married is an obvious one, or you may alter your job, become self-employed, decide to incorporate it into any pension arrangements you have, or extend or reduce the term of the advance. All these situations may precipitate a new approach to mortgage finance. Your existing lender will no doubt be pleased to help you consider all your options. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A><A HREF=money:navigate/guide/guide/222001/78>G L O S S A R Y ______________ MIRAS</A><A HREF=money:navigate/guide/guide/222001/100>G L O S S A R Y ______________ PEP</A></td></tr></table></td><td align=left valign=top><a name=4>A Change in Legislation</a> Most existing borrowers will be familiar with the MIRAS scheme, where mortgage interest relief is allowable at source, enabling payments to be made net of tax relief. (See also <A HREF="money:navigate/guide/guide/001012.html">Tax and Your Home</A> and <A HREF="money:navigate/guide/guide/004010.html">Property and Tax</A>.) If a future budget seeks to change that allowance, or indeed any mortgage interest relief or tax advantages, such as those associated with pension or PEP mortgages, then there are valid grounds for a re-think of your mortgage arrangements. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A></td></tr></table></td><td align=left valign=top><a name=5>Rate Changes and Special Offers</a> Then there are circumstances where a lender's rate change (usually upwards) will set off a cascade of borrowers seeking alternative mortgage suppliers in the hope of a lower rate. While most banks and building society rates move broadly in line with each other, the competition at the marginal end of the business is extremely intense and millions of pounds are at stake between lenders. The Best Rate tables are watched avidly, particularly by brokers, but also by borrowers determined to get the best deal (they are usually published in the finance supplements of weekend newspapers such as the Sunday Times and the Saturday edition of the Telegraph). In a bid to attract this more fluid sector of the market, lenders have, over recent years, begun to woo existing borrowers with guaranteed rates and cash-back options. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A></td></tr></table></td><td align=left valign=top><a name=6>Guaranteed Rates</a> The attraction of a fixed-rate mortgage depends on the outlook for interest rates. They are very popular when interest rates seem to be bottoming out. For many years now there has been a sustained period of relatively low interest rates and lenders have offered the chance to lock in at a low rate for one year, three years, or even five years. You should remember that interest rates go down as well as up, so consider all possible scenarios before making your choice. What is worth watching is what happens after the fixed period. Does the borrower need to re-negotiate the rate afresh? Is the borrower locked into the contract and liable to a penalty even if they pay off the loan early? Is the rate offered after the fixed period higher than the standard variable rate? It is important to ask all those questions (and get the answers) before being tempted to switch into a fixed-rate mortgage. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A></td></tr></table></td><td align=left valign=top><a name=7>Cash-Back Options</a> Lenders have been cashing in on the fact that any offer of substantial cash is hard to resist, particularly when engaging in the costly business of moving house, and this new breed of mortgage offer is rapidly gaining popularity. So fierce is the competition for market share that, from time to time, mortgage lenders offer what seem to be remarkably generous offers, some giving up to ú10,000 back to a new borrower. What you should remember is that a mortgage is a long-term commitment, not a quick fix which you will be negotiating again in a year or so, so take the cash figure into account in the context of the rate offered and what that means in terms of increased repayments over the entire term. Also, look closely at any penalty clauses which you might overlook in the excitement of getting your hands on the cash. Money does not grow on trees and lenders are still making commercial decisions behind these too-good-to-miss offers. Take into account all the aspects of the contract before you switch your mortgage. </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A></td></tr></table></td><td align=left valign=top><a name=8>Switching Costs</a> It is rare to have the opportunity to switch mortgages, particularly to another lender, without incurring costs. First, there are the re-valuation fees and survey fees. There are legal costs in lodging the security on the new advance. Often there are arrangement fees paid to the new lender and redemption penalties due to the old lender. Remember to take these into account before you decide how to spend your "cash-back". </td></tr><tr><td align=center valign=top><table border=0 cellpadding=0 cellspacing=0 width=138><tr><td align=right valign=top width=138><A HREF=#top TARGET=_self>ß B A C K _____________ to the top </A>Expert A s s i s t a n t <SCRIPT LANGUAGE=VBScript></SCRIPT> </td></tr></table></td><td align=left valign=top><a name=9>Consider all the Options</a> It is wise to keep up-to-date with the market in relation to the terms of your mortgage contract. The market is moving very fast and there are bargains to be found for those with their eye on the ball. Just make sure that you are switching for sound financial reasons and avoid being blinded by those cash-back offers. Whilst some of them are indeed worth switching for, others have a nasty sting in their tail. N E X T T O P I C <A HREF=money:navigate/guide/guide/004009>Investing in Property</A>To access further financial articles, have a look at <Spann Class=MSNLink>MoneyManager on MSN! <a href=http://MoneyManager.uk.msn.com><img src=msn_logo.gif border=0 align=top></a> Copyright 1997 Microsoft Corp.</td> </tr> </table> </td> </tr> </table> </body> </html>