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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Knowing my BMR from my SMR
I am looking at remortgaging but have noticed if I stay with my current lender I will either be charged a ‘BMR’ (Base Mortgage Rate) or an ‘SMR’ (Standard Mortgage Rate). The BMR is much lower.
How do I know which rate I will move to and is there any way I can get a cheaper deal? My interest rate is currently 2.29% but if I move to the BMR it will go up to 2.75% and if I move to the SMR it will be 4.24%. I am wondering if there is any point remortgaging if the BMR is only marginally higher than my current rate.
Answer
I am guessing that you are looking to remortgage as your current deal is coming to an end? Assuming this is the case, you need to thoroughly research your options. The BMR looks tempting at 2.75% but I would imagine there a fee attached to this option? Likewise, I imagine that moving onto the SMR comes without a cost.
Without all the facts, it is incredibly hard to advise you what to do, so my advice would be to understand fully what your current lender will offer to you – ask about their fixed rates too. Once you have all the details, speak to a broker to see what you can access from the rest of the market.
If you line up all of the options, looking at both the interest rate and the arrangement costs, hopefully, the best course of action will become apparent. Good luck.
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Question
Taking a mortgage holiday
For health reasons I am thinking of taking three months’ unpaid leave in the summer.
I live alone and have no dependants. However, I won’t be getting paid during this time. Although I can just about cover the mortgage with some savings I don’t really want to dip into them as the savings account has a penalty for withdrawals. Would I be allowed to pay for the mortgage with my credit card for this period of time? If not, are there any other options available?
Answer
I am afraid that lenders do not accept credit cards as a means of being paid, so this is not going to work.
One option would be to speak to your lender and ask whether they would agree a mortgage payment holiday. When you do this you will also need to ask them to confirm whether the payment holiday will be recorded as a missed payment on your credit file. I have seen occasions in the past where lenders have agreed a payment break for their borrowers and then they have recorded the missed payments, so you just need to make sure this won’t happen to you.
If this doesn’t work out it could be worth considering borrowing the money a different way, however, I suspect that the cost of this would outweigh the penalties you would pay on your savings account for accessing the funds, so you would need to look at all options to figure out which will work out best for you.
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Question
Is it a good time to get a mortgage?
I have a very simple question – is now a good time to get a mortgage?! My daughter is a first-time buyer and is looking at houses with her partner.
I am really worried about her getting onto the housing ladder what with Brexit and all the other economic uncertainty. But people keep telling me there are lots of good deals around. Should she wait, or go for it?
Answer
Ah yes, the million dollar question! Whilst I can’t tell you what will happen with house prices and indeed Brexit, I can tell you that mortgage rates are good. Very good. In fact, historically good! So, if the decision to buy is to be purely driven by mortgage rates then yes, it’s the perfect time to get started!
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Question
Is it worth getting insurance?
I am looking into remortgaging at the moment and have spoken to a couple of brokers who have both mentioned critical illness cover and income protection.
I am not sure whether it’s a good idea as I already have life insurance along with a nest egg tucked away in an ISA which I plan to use if I were made redundant. However, I wondered if there’s anything else I have overlooked? What do you advise?
Answer
If insurance were free, we would insure ourselves against every eventuality! I am sure you don’t really want to use that nest egg you have worked so hard to build up to cover you for something like a period of unemployment. However, insurance is not free so it’s all about prioritising what you insure yourself for, within your budget.
I would dearly love to see every borrower covered so that if they die their family will have a roof over their head, and if they are ill the worry of affording their living expenses is taken care of whilst they recover. So yes, I feel that the advice you have been given is sound, but I appreciate that cost may be an issue.
Just try and ensure that you have enough protection that if life deals you a blow, you will be able to manage.
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