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A money journalist’s personal finance revolution: Part 4

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
22/10/2015

In the latest instalment of her personal finance column, Cherry Reynard shares some handy tips on the difficulties of shopping around for a new mortgage and explains why her savings pot remains in negative territory.

Spending

Part of neat and tidy finances is undoubtedly the right mortgage. This is most people’s largest financial commitment and the rate paid can make a vast difference to your monthly outgoings. On a £200,000 repayment mortgage, the difference between a 5% rate and a 2.5% rate is £273 per month.

This would argue quite forcefully for making sure you’re on the best rate and shopping around different providers. However, as I have recently found to my cost, remortgaging is a horror show. I think I would rather re-sit my A levels and my driving test all in one day than go through it again.

Our relatively high, five-year fixed rate was coming to an end. I didn’t want to hang around on the standard variable rate for long – if you like burning ten pound notes, it’s a good option, otherwise, probably not. I look online at the various seductive two-year deals available and get very excited. There appeared to be a lot of money to be saved.

Two months and three applications later, I was in a slightly different frame of mind. I’d been asked everything from my cat’s birthday to how much I spent on pot plants. We wanted a bit of extra money for refurbishments – did we have builders’ quotes? Couldn’t we be doing it cheaper? In the midst of this, I read various articles about how banks needed to tighten their lending – really? To who? Oligarghs only?

Did I learn anything from this awful process? Mortgage advisers can help, but ultimately they can’t do the really hard work – finding the right documentation, making sure your finances are in order. They can potentially argue your case a little stronger, but take recommendations on a good one. A bad one can be worse than useless. You also need to be both persistent and realistic. Most of all, I learnt that it takes time.  It’s still worth doing, but only just.

Saving

Markets have not produced quite the dramatic bounce that I might have hoped and my small pot of savings is still £3 down. I’ve talked to various people about the possible reasons for the general gloom and there seem to be a couple of ideas knocking around.

The first is that the Federal Reserve should have raised rates. To those of us who like low mortgages, that may seem counter-intuitive, but it would have sent a message that it had confidence in the economy. As it is, it’s pretty much admitted that it’s terrified about China as well.

Equally, there are those who believe it has lost some credibility through the process. It said that it would raise rates when employment reached a certain level and it hasn’t done it. No-one likes to feel that the US central bank is a bit…well….wibbly.

Nevertheless, there is a more positive perspective. A number of fund managers in Asia have been arguing that markets are misreading the China situation. In fact, slowing economic growth is part of a move to a ‘new China’, one led by consumption, rather than commodity-intensive infrastructure development. If this is the case, the much-anticipated China meltdown is just an illusion.

So for now, I’ll take heart from that. Until markets find something new to worry about, of course.

Click here for part 3 in the series.

 


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