May 10
27
An abundance of free mortgage quotes can cause confusion for the average borrower as lenders compete for custom; but some institutions are trying to claw back what they have lent by encouraging customers to go elsewhere and at the same time will pay off part of the debt themselves. This strategic manoeuvre may seem too good to be true, but if you already have a mortgage, you could literally wipe thousands off your existing debt.
Struggling lenders have decided that the best short term solution to their financial situation is to reduce their overall existing debt. To do this, they need to get their money back off their customers who have borrowed large amounts for a mortgage by encouraging them to remortgage with another lender. For their customers to get a mortgage quote that will make the move worthwhile, they need to be able to borrow less than they currently owe. Ergo, it makes sense to wipe off some of that debt in return for getting the rest of the money back. This appears to be a win win situation for lenders and borrowers alike.
At present, these deals are offered on an invitation only basis, and will only benefit those who are considered low risk. With lenders offering to pay up to 20 per cent of a loan, this in effect gives the borrower a much higher percentage of equity in their home, and therefore access to better mortgage rates when approaching competitors to remortgage. However, if your mortgage is with a major bank, don’t expect to be offered one of these lucrative deals.
It is only specialist lenders, and mostly ones that have pulled out of the British market that are offering to buy their customers out, and it is not a practice that the industry want to shout about. So far only GMAC, Edeus and Advantage have admitted to cherry picking the right customers to offer the deal to. However, if you think that you are a good credit risk and you know you have kept up with your repayments, it is worth asking your lender if they are willing to make a similar deal so you can get a favourable quote off another lender.
