One of our long standing clients approached us for advice as his mortgage product was ending. We reviewed his options, and agreed he would like to take out a 5 year fixed rate. Having reviewed the market we concluded his best option was to take an offer from his existing well known high street lender.
Our client spoke to the lender, and was offered a rate of 2.84%. A few weeks later we went to apply for this, to find the rate had changed to 3.19%. The client was happy to go ahead with this, but we could see no reason for the change. We therefore suggested he should wait whilst we did a little more digging.
On checking the numbers we found that his loan to value was just under the 80% mark, but on checking the rates we found the rate he was being offered was for loans over 80%. It was possible the lender had changed their recorded property value, but this seemed unlikely.
After much pondering we came up with a possible answer. As the lender charges daily interest, then this is added to the loan every day. This could mean that over the month then he could be pushed over the 80% threshold, and by looking later in the month the products had changed. We therefore suggested waiting until the start of the next month, and then re-apply for the product change.
We did this, and were offered the original rate. By waiting a few days to do the application (which still doesn’t come into effect until the start of next month) we have saved the client £1,525.80 over the next 5 years. There is value in knowledge of maths, and questioning odd answers, and also understanding how bizarre the systems of some product providers are.
Why not call us and make an appointment for a free consultation.