Changing building societies - very expensive!

Aug 08, 2005 3 Replies

I am with Alliance & Leicester at present, and my 2 year discount period is expiring.



They have offered various products, but they fix up their "product fees" so high that it is barely worth moving to most of them.



I've looked at other building societies and the cost of moving is very high indeed. One has to pay for a survey (£850 in the Newcastle case) and several other things.



One reads about people who swap building societies every couple of years, but I wonder what they base their decisions on. The gain is usually very small, given that one has to recover the up front charges over (usually) 2 years.



A & L now move people whose discount period has expired (and who take no action to move) to a product which has no product fee and the rate isn't too bad either. But it's up to 1% higher than some other places. The trouble is that by the time one has paid the survey etc charges, it isn't worth moving. Evidently, they know this :)



This used to puzzle me also until I realised that the newspapers that carried these stories also seemed to have a high number of adverts from building societies. As you have realised by doing your sums, it can be expensive. However you need to remember that many people don't do the sums and get caught up in the remortgage fever.

Maybe they did the sums and worked out they'd save more than the fees over the fixed/discounted period? You won't need a survey in most cases - just a valuation (much cheaper). I think you might also consider remortgage packages where legal fees etc. are reduced or refunded.

Thom

Amongst others, Halifax are doing a 4.29% fixed rate for 599 arrangement fee and Nationwide are doing a 4.39% for 484, both with free valuation and free legal fees for remortgages - check out the fee free deals though, depending on the size of your loan, something like the Nationwide 2 year fixed at 4.79% with only a 95 arrangement fee would be better value than the lower rates for smaller loans.

This is assuming your looking at 2 year fixed rates - which are currently pitched around the same area as tracker rates.

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