AN online tool is promising to help homeowners find a better deal on their mortgage almost instantly – and it could save you thousands of pounds a year.
The new remortgaging function in the app by credit reference agency ClearScore is said to allow users to compare offers in just 15 seconds.
Getty – Contributor
To compare home loan deals, customers currently have to fill in information, such as the current value of their home, the outstanding mortgage as well as their monthly payments to get a quote.
They then have to compare deals on the market with their current mortgage, which some people may find confusing.
In fact, 25 per cent of homeowners don’t remortgage before their deal comes to an end, meaning they’re moved onto the lender’s standard variable rate (SVR) – costing them up to hundreds of pounds extra per month.
The new app, which was launched by ClearScore with mortgage technology provider Koodoo today, eliminates some of the application process.
It automatically puts in all the information needed to generate personal mortgage deals for you by taking existing information from your credit report and valuing your property. And it could save you both time and money.
Homeowners with a £100,000 mortgage fixed over 25 years could save £187.93 per month by moving from an average SVR at five per cent to a two-year fixed rate at Lloyds Bank of 1.43 per cent, David Hollingworth of mortgage broker London & Country told The Sun.
This is based on a loan-to-value (LTV) of 60 per cent and includes the £999 fee.
If you instead had an outstanding mortgage balance of £150,000, your monthly repayments would drop by £281.91 if you switched – meaning you’ll save almost £3,480 over 12 months.
Just keep in mind that the ClearScore app currently doesn’t take into consideration any fees you may be hit with if you leave your current deal, meaning you’ll still need to calculate whether the new deal is better than your old one.
In fact, the costs of remortgaging could sometimes eat into the savings you’re making by switching to a mortgage with a lower interest rate, so make sure you double-check this beforehand.
A spokesperson for ClearScore told The Sun it plans to build in a function showing exit fees in the next few months.
It’ll also launch an automatic monitoring service that checks the mortgage market each day and notifies customers when they could save by switching.
This service can be compared to mortgage platform Dashly, which launched in October last year.
How to find the best mortgage
FINDING the right mortgage is all about your individual circumstances. Here’s some advice on what you should keep in mind:
- Decide what kind of mortgage you want: a fixed deal means you’ll know exactly what your mortgage will cost, but if interest rates fall, you won’t see your payments drop. A variable deal means your costs will fluctuate, but only because of economic changes, rather than decisions by the lender.
- Shop around: there are big differences between mortgage deals, so make sure you compare costs. Also check whether there are any cashbacks or other offers. Here websites such as Moneysupermarket and Moneyfacts may come in handy.
- Calculate your total costs: look beyond the headline interest rate and take into account all the fees you have to pay, such as arrangement fees, mortgage valuation fees and insurance fees.
- Consult a mortgage broker: if the flurry of options are confusing, a mortgage broker can help you find a deal that best suits your personal circumstances. Just make sure that you use an independent company or adviser.
The app is available to ClearScore’s seven million UK users through the iOS and Android app and website. You can sign up for free here.
Justin Basini, co-founder of ClearScore, said: “The current process for comparing mortgages online is really time-consuming and laborious – you have to fill in several pages of information before you can even get an estimated quote.
“It’s painful and is putting people off switching to a new deal, costing them hundreds, sometimes thousands of pounds.
“We want as many people as possible to be able to take advantage of the record low remortgage rates on offer in 2019, using the latest technology to make it as simple and clear as possible for users to compare deals and save money.”
Meanwhile, David Hollingworth, said: “Anything that helps make it easier for borrowers to get an idea of how much they could be saving on what’s likely to be their biggest monthly outgoing has to be a positive move.
“Although there’s a lot that can go into finding the right mortgage deal for you, this tool looks to take out some of the hassle factor by filling in the basic information required to see the deals that could be on offer. “
Earlier this year, research found that four in 10 homeowners will be saddled with mortgage debt in retirement.
But the financial regulator has also pledged to help up to 140,000 mortgage prisoners get better home loan deals.
Plus, here are the 10 reasons why you might be rejected for a mortgage – and how to increase your chances of getting accepted.
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