People switching mortgages need to check for redemption fees

Industry officials have urged homeowners that may be thinking of switching their mortgages to make sure they check and see if there are any redemption fees that may be charged on their existing mortgages, as otherwise they could end up switching but getting no financial benefit from the switch.

Many homeowners come across a good deal with another lender or products, and instinctively start proceedings to switch from their current provider or mortgage. However, those that fail to check whether there is any redemption fee charged on the existing mortgage could get a nasty shock.

One industry official, Jane King from Ash Ridge finance, said that in some cases consumers may find that they are better off asking their existing mortgage provider whether there are any better deals that they can be moved onto rather than going through another provider. This is because this can save them money all round, including on valuation and legal fees.

The warning comes as many homeowners may be panicking and thinking about switching their mortgages as a result of speculation about base rate increases which have been in circulation of late. Whilst some industry officials believe that the base rate may stay at its all time low of 0.5 percent for some time others have predicted that it could rise swiftly and significantly. This could result in many homeowners panicking and trying to switch, but without doing some research into the costs involved this could prove costly for many.

Ms King said: “Homeowners should take into consideration any future plans for moving house, further borrowing etc before deciding on the right time. If they are planning to move from employed to self-employment in the near future then it may be appropriate to look at the mortgage first as changing will be difficult for the newly self-employed.”