One of the most stressful things about the UK’s competitive financial market is that one constantly feels under pressure to make sure one has the best deals. Could you save money if you switched gas suppliers? Are you getting the best interest rate on your savings? Might a different mortgage save you thousands every month? These days, we’re told, all we need to do to find out is log on to the internet for a few minutes. And if we find a cheaper deal, a few clicks and the savings will be ours. It’s not true, of course. Something will go wrong – it always does. And when it does, there’ll be no few clicks about it: have a go at cutting your gas bill and you’ll spend the next two weeks on hold trying to sort it out with a variety of charming but confused Bombay-based customer-service operators.
We all know this and that’s why so many of us never quite manage to get around to logging on to the appropriate comparison websites: we dread the administration nightmare so much, we’d rather carry the guilt of apathy than deal with it. Given this, I suspect many will be pleased to hear that when it comes to mortgages, at least, switching is often no longer worth the bother.
Consider the case of The Guardian’s Rupert Jones, who, having seen his payments rise three times since August, last week decided to log on and find a better deal. He typed the details of his mortgage (“just under £200,000”) into the ‘mortgage wizard’ on John Charcol’s website and out popped a huge list of fixed, tracker and discounted loans all offering lower rates than his current one. The problem was that once the small print was taken into account, the savings were “small to non-existent”. Top of the list was a two-year tracker from BM Solutions, charging just 4.44%. That would mean a monthly cost of £71 a month less, a saving of more than £1,700 over two years. The catch? Total upfront charges of £3,440 (including an ‘arrangement fee’, a ‘telegraphic transfer fee’, a ‘land-registry fee’ and legal fees). It was the same story with nearly all the deals. Jones gave up.
He probably isn’t alone in finding that being a ‘rate tart’ isn’t all it’s cracked up to be. Banks are out to make money – if they offer a low headline rate, they’ll claw the cash back elsewhere. As a general rule, the lower the headline rate (and hence the higher up the best-buy table a lender is), the higher the fees. So if you’re thinking of looking for a new mortgage, remember you’ll have to spend time with your calculator before you know if you’re getting a deal or not. If you’d rather not think about it, take heart from the fact that, in most cases, it wouldn’t do you any good anyway.
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