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Switching mortgages: is it worth the hassle?

Until not so long ago, a mortgage was for life. Or at least for the duration of the loan, usually 25 years. Back in those innocent days, changing mortgage providers, even if it was possible, would have seemed as daunting as filing for divorce. These days we are all merrily switching mortgages every two years, hopping into a relationship with whichever lender whispers the sweetest interest rates into our ears.

The mortgage comparison sites like moneysupermarket.com and thisismoney.co.uk encourage this notion of a mortgage being like any other consumer decision: look for the best price and grab it.

In fact closer inspection of those sites reveal that there is very little difference in the deals offered by most of the high street lenders. Nationwide (nationwide.co.uk), Halifax (halifax.co.uk) and NatWest (natwest.com) might offer a few variations in their rates, but it's rarely more  than 0.1%.

Occasionally a maverick building society or bank will offer an eye-catching rate, but closer inspection usually reveals that there are plenty of exclusion clauses, or that this mortgage requires a 50% deposit, or certification by a 3rd party. The deals that seem too good to be true usually are.

When considering a switch, it's best to have a calculator to hand. If you have a substantial mortgage, in the region of £500,000 say, that 0.1% is going to make a significant difference to your monthly repayments, and it is well worth chasing the very best rate.

For mortgages under £200,000, you have to factor in the fees involved in switching mortgages (often at least £999), the possible costs of a property valuation and legal costs, and weigh them against any potential saving, bearing in mind that you might be going through the same process in two years time.

For many the sums won't add up, and it will become apparent that switching mortgages is just one of those modern consumer habits that needs closer scrutiny. When your mortgage comes up for renewal, why not contact your current provider and ask about their best deal for an existing customer? You may be pleasantly surprised.

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