Thanks to the variety of mortgage lenders available now, the mortgage market is becoming more and more competitive and to remain relevant, mortgage lenders have had to come up with special mortgage deals that come with unbelievably low interest rates. Usually, these special deals come with conditions and clauses, which tie you into staying with the lender for a specified period of months or years after you sign the deal. If you decide for any reason that you want to change lenders and move your mortgage somewhere else, then you are expected to pay an early redemption fee. The period for which you are expected to stay with your lender is as a result of the special mortgage deal is known as a tie-in period.
These special mortgages are either a fixed-rate mortgage, a discounted-rate mortgage or a capped-rate mortgage. It is commonplace to see that that the tie-in period is of the same duration as your mortgage term, but sometimes, the tie-in period extends further than your mortgage term removing the choice of refinancing from you. Accepting a deal with a tie-in period can be advantageous for a borrower who has come across a mortgage offering a good deal on interest rates, especially for the short-term but it could also spell trouble. The redemption penalties which you have to pay if you decide to change lender could make it not worth it. If you as a borrower would rather have a high degree of flexibility on your loan and would like to leave the choice of a remortgage open or if you are likely to want to make overpayments regularly, then a tie-in deal is definitely a bad idea for you.
Making sweeping generalisations are just as dangerous as making uninformed decisions. If you would like some advice from a home loan expert, please call us at 02380970979 or fill the contact form below for a quick quote or solid advice from a professional broker with years of experience in the home loan market.
Some lenders offer home or mortgage payment protection policies and will often try to get you to buy their policies. These policies can be overpriced, which means that they will cost you a lot more than is necessary. Due to the fact that it comes bundled with the lending service, it will seem like a condition to get access to their service. Some lenders will charge you a penalty if you choose to insure elsewhere. This penalty is also known as a “tie-in” and sometimes you lose the value of a cheaper mortgage when you sign up for a tie-in.
Even when the mortgage seems like such a cutthroat deal, it is often best to avoid any mandatory insurance tie-ins as these can be likened to scams. When you compare, you might find differences of up to £150 a year on a “Building and Contents” insurance. A cheap looking insurance is an easy way to lure a lender into an insurance tie-in. You will need to carefully scrutinise your offers, and this is why you need a Remortgage Fast broker to help you avoid making financial decisions that is equivalent to shooting yourself in the foot. Before you get into one of those deals, speak with a Remortgage Fast Broker at 02380970979 or get in touch with us through the contact form for expert advice.
Does the tie-in period have any advantages for the borrower?
While shopping for a home in Hampshire, it is a good idea to avoid any tie-ins, but also, making the correct choice is fully dependent on each borrower’s specific set of circumstances. While agreeing to a tie-in period is usually a condition towards being offered a special rate mortgage that can come with appealing conditions such as a discounted rate, or some other special rate, don’t jump in just yet. It is important to compare the long-term gain of accepting such a proposal with the disadvantages of being unable to change your lender at will without paying a penalty, or being able to shorten your loan term by making overpayments on your loan. The most important thing to do, however, is to speak to a professional Remortgage Fast broker, by calling 02380970979 or filling the contact form below so you can get advice that is based on your specific set of circumstances.
Are insurance bundles/tie-ins a good idea?
The key to finding the best mortgage deals for you lies in research, comparison and speaking to a broker at Remortgage Fast. Most times the lender charges you a fee for deciding to insure elsewhere and that’s okay. What you need to do is to shop around and compare insurance rates from several other insurers, if you find that you will be making savings, especially after paying the lender’s penalty, then it is obviously a better idea to insure elsewhere. The best thing to do is to collect quotes from at least three other insurance providers before you agree to a bundled insurance policy from your lender. The only obvious advantage would be with the fact that you won’t have to deal with different institutions hence the term “bundling”.
Now that you know most of what you need to know about tie-ins and the tie-in period, it’s time to speak with a professional at Remortgage Fast. Generic information can be a two-edged sword which could hurt you when it is not wielded by an expert. At Remortgage Fast, our team of brokers are financial professionals who are in the best position to give you advice and recommendations based on your specific set of circumstances. If you are looking for a quick quote, advice or access to a wide range of transparent offers from the most outstanding lending institutions in Hampshire, speak with a Remortgage Fast broker and be well on the way to making secure financial decisions. Call us today at 02380970979 or fill the contact form to get a quick quote or advice.