This is a mortgage which starts off as a tracker and benefits from any cut in Bank Rate but allows you to switch into any fixed rate the lender offers if and when you choose to do so. You can do this without incurring any early repayment charges (ERCs) and with the only cost being the fixed rate arrangement fee. Nationwide, Santander, Tesco, Virgin and Woolwich all offer this facility on some or all of their trackers.
Looking to buy or remortgage but don’t want to miss out on the expected fall in mortgage rates?
Posted on 6 July 2016
Many experts in the housing market believe that following the UK’s decision to leave the EU there will be a fall in interest rates. If you’ve heard this and are putting off remortgaging, purchasing a home or speaking with a mortgage broker until rates do fall, then you shouldn’t!
There are two strategies that can help ensure you get the best rate now, with the flexibility to switch to a better rate should it become available in the near future:
Product switching prior to completion:
Some lenders will allow a borrower who has applied for a fixed rate to switch to a new cheaper deal, even after the mortgage has been offered. The only stipulation is that you can’t have yet completed your property purchase or remortgage. In most cases there is no cost for doing this, but some lenders do charge a small admin fee.
The benefit to borrowers is that if they submit an application now then they can secure the best rate currently available, but should rates fall during the application process, you can switch to the new lower rate. On the reverse, if rates do rise, your mortgage offer is locked in at the agreed lower rate.
Mortgage lenders who offer product switching include:
Mortgage in principle offer period
Allow you to switch to a better rate?
Administration fee for switching mortgage offer
|BM Solutions||6 months||Yes||Nil|
|Coventry & Godiva||4 months on purchase 6 months on remortgage||Yes||Nil|
|Halifax||Within completion date stated on product||Yes||Nil|
|Nationwide||6 months on purchase 3 months on remortgage||Yes||Nil|
|NatWest||3 months||Yes||Original product fee non refundable|
|Post Office||6 months||Yes||Nil|
|Santander||Within completion date stated on product||Yes||£199|
|Scottish Widows||90 days||Yes||Nil|
|The Mortgage Works||6 months||Yes||£350|
|TSB||Within completion date stated on product||Yes||Nil|
If you have a question on fixed rate or Droplock mortgages call us on: 0344 346 3708 or request a call back here.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.