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Martin Lewis warns millions of homeowners to act now to cut £1,000 off their bills

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The Bank of England has raised the key rate again, which means that it is time to act. Those on SVTs have a month to shop, while others on fixed deals that will soon expire may want to start locking in a new rate now.

Capital Economics analysts expect interest rates to reach 1.25% by the end of 2022 and 2% in 2023

Martin Lewis has urged homeowners to check their mortgages after the Bank of England raised interest rates for the fourth consecutive time last week.

The consumer expert said those on variable rates have about 30 days to shop around before their bills go up, while others on fixed deals that will soon expire may want to consider locking in a new rate now.

‘The cheapest fares are gone – if your plan is ending soon or you’re on the standard fare, check NOW to see if you can save,’ Mr Lewis explained in Wednesday’s MSE newsletter.

“The 0.25% increase in the base rate will likely take a month to trickle down to most standard variable rates (SVRs), although some trailing rates have already increased. This will add around £12/month per 100 £000 mortgage,” Mr Lewis added.

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Fixed rate offers are slowly increasing. Last fall, more than 50 fixed rate mortgages below 1% were closed. Now the lowest fix is ​​2.1%.

This means that for someone with a £200,000 30-year mortgage, the cheapest rate today would cost £120 a month more than the cheapest in October.

“With further rate hikes planned and many lenders’ default standard variable rates heading towards 5%, it’s a must to check if you can save by changing the deal,” Lewis added.

“You might not save as much as you did a few months ago, but compared to what you were doing now the change could still help you save £1,000.”

We have a guide on how to remortgage, here.

Further hikes in the base rate are expected and analysts at Capital Economics expect it to reach 1.25% by the end of 2022 and 2% in 2023.

You don’t even have to be at the end of your mortgage to make a new deal.

Many banks allow you to set up a new mortgage up to six months before the end of your current loan.

Lewis said trailing mortgages are often less expensive than fixed-rate loans, but they scale with the base rate whenever it changes.

Mortgage repayments have jumped by £100million a month since the autumn after a steady rise in rates offered on new fixed-rate deals, according to further research from L&C Mortgages.

It found that the average of the lowest two- and five-year mortgage rates of the top 10 lenders now stood at 2.36% and 2.46% respectively, after rising from historic lows of 0.89%. and 1.05% respectively last October.

David Hollingworth, Associate Director at L&C Mortgages, said: “The market is moving at breakneck speed as lenders attempt to manage their product lines and loan volume, often resulting in products lasting days rather only weeks.

“This presents a real challenge for borrowers trying to keep up with market movements, but with the continued increases in mortgage rates, it is all the more important for borrowers to keep tight control over their mortgage.”

Remortgage advice from Martin Lewis

1. Find your current mortgage details

This includes the interest rate, monthly repayments and outstanding debt.

Homeowners also need to determine the type of mortgage they have, as well as the term – how long you have to pay it all off.

Importantly, also check to see if you have a prepayment charge – a charge if you change too soon.

2. Find out the cheapest offer from your current lender

Taking out a new mortgage from your current lender is called a “product transfer”.

The main benefit is that it allows your lender to skip the usual financial capability checks they perform on new clients.

It can also mean paying lower fees and less paperwork hassle.

3. Compare available offers

Once you know what your lender’s best offer is, go check out their rivals. A mortgage broker can help, although many charge a fee.

4. Use online calculators to find the best deals

MoneySavingExpert has tools to help you find the best mortgage for you:

– Basic mortgage calculator – including what it will cost
– Compare two mortgages
– Compare fixed rate mortgages
– Do you have to give up your dose?
– How much can I borrow an estimate calculator

5. Find the best offer for you – and do your best to be accepted

If you remortgage, a lender will perform financial checks on you.

Lewis said making sure you’re creditworthy can help improve your prospects.

He advised Britons to check their credit report (for free) to make sure there are no mistakes.

Reduce credit inquiries and pay off debts, if you can.

Spending as little as possible in the months leading up to applying for a mortgage can also help.

They want to see that you can afford refunds, and therefore spend less before applying shows them that you can be thrifty.

6. Consider using a good broker

Brokers will not only compare the entire market for you, but they may also have access to exclusive offers that you might not be able to access as a member of the public.

A good broker can also make your case to a lender if they initially refuse to give you a mortgage.

This is especially important if you have anything unusual about you, such as bad credit, or are trying to buy a non-standard home.

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