Tips to help you survive the credit crunch

With all the gloom and doom in the press its easy to think you’ll never get a decent mortgage deal again if you are an existing borrower, or that you’ll never get on the housing ladder if you are a potential first time buyer. The reality is somewhat different – here are some steps you should take to make sure you’re in the best position.

To speak to an adviser call 0800 694 2444 or book a call back

Existing Borrower

• Make sure you know what the terms of your current mortgage are - interest rate, when the deal ends and how much you owe – and start planning to switch your deal 3 months before it is due to finish.  Check whether your current deal has any Early Repayment Charges (ERCs) and when they finish.
• Take advice from a reputable broker who will search the whole market and not charge a fee for advice to make sure you access the most suitable deal for your personal circumstances – Tesco Mortgage Finder offers this service.
• Don’t dither when making your application – the best deals aren’t around for long as lenders are withdrawing them at short notice. As an added bonus with Tesco Mortgage Finder you’ll even be rewarded with 1000 clubcard points if you make you application within 5 working days of receiving your mortgage product recommendation.
• If you have any spare cash, use it to make overpayments on your existing mortgage – as a rule of thumb, the lower the amount you borrow relative to the value of your property, the better the deal you are likely to get.  Check with your lender how much you can overpay without incurring ERCs

First Time Buyer

• Save as much as you can for a deposit on your property – the number of lenders offering 100% deals has reduced considerably and the cost of these has gone up.  The bigger the deposit you have, the better the deal you are likely to get.  Don’t forget to budget for other costs such as survey and legal fees and Stamp Duty (use the Tesco Stamp Duty calculator)
• To see how much you are likely to be able to borrow, use the Tesco Mortgage Finder Calculator.  Remember to factor in other regular costs such as council tax and home insurance when working out how much you can afford to pay each month.
• Research the property market carefully before making an offer  - remember it is currently a buyers market and you may be able to make significant savings over the asking price.
• Take advice from a no fee whole of market broker to access the most suitable deal – remember to ensure that you can make overpayments on the deal so you can chip away at the capital you have borrowed whenever you have spare cash – it will stand you in good stead for the future.
  Watch out for Higher Lending Charges (HLC).  Many lenders charge a HLC to borrowers with a deposit of less than 10%.  The charge can run into thousands of pounds and it should be avoided.

Overall remember that getting a deal will save you money compared to being on a lender’s Standard Variable Rate (SVR) – a typical SVR is around 7.25%. Don’t overstretch yourself, only borrow what you can afford to repay and finally that housing is a long-term investment – you’re unlikely to make a quick buck.

Tesco Mortgage Finder offers free mortgage advice from the whole of the market in association with award winning mortgage broker London & Country.

To speak to an adviser call 0800 6942444 or book a call back.
To see current Best Buys Click here
To use Tesco Mortgage Finder calculators Click here