Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@theipaper.com.
Question: My fixed-rate mortgage is coming to an end soon and I owe around £300,000. I have seen a new lender offering a rate that is about 0.05 percentage points cheaper than the product transfer rate with my current lender. The savings look small, but I do not want to overpay if there is a better deal elsewhere.
Is it worth switching lenders for such a small rate difference, or is it usually better to stay with the same lender and do a product transfer? What would a mortgage broker normally advise?
Answer: Honest answer: on a £300,000 mortgage, a 0.05 percentage point difference is unlikely to justify switching lender on its own. But it still deserves a proper look before you decide.
That gap works out at roughly £150 a year, or somewhere between £5 and £10 a month on a repayment mortgage, depending on your term and rate. Not nothing, but not the number your decision should rest on.
