Re-mortgaging - Is it really worth it and what are the catches?

The re-mortgage market in the UK is big business for most lenders. Mortgage lenders have become increasingly aggressive with their marketing tactics over recent years as they try to hold onto or increase their market share at the expense of their competitors. In some ways this has worked to the advantage of the consumer but it also means that most lenders will now offer more attractive deals to new borrowers than they will offer to their existing customers. Before the early 80's most people arranged their mortgage with one lender and then stuck with that mortgage throughout its life. Mortgages were generally provided by Building Societies and the borrower was expected to go cap in hand to their Building Society who would lend if a savings account had been held for a sufficient period of time and if the lender had not used up their quota of funds for that period. In other words the lender had the 'upper hand' and the borrower was at their mercy. This all started to change in the mid eighties as the role of the Buildings Societies became less restricted and a new Building Societies Act took effect which allowed the Building Societies to compete head to head with Banks and Insurance Companies in all areas of financial services. As the Banks and Insurance Companies saw their territory being invaded by this new breed of Building Society so they too fought back and started encroaching on the Building Societies territory, most significantly, by entering the mortgage market. In addition Building Societies were released from the constraints that they had been under with regard to raising funds and were now allowed to raise money on the Wholesale Money Markets. All of these changes combined to make one very big difference to the market - there was now no shortage of mortgage money for the financial institutions to lend and a big fight was on to attract the customer. As with any product greater competition is generally good for the buyer resulting in lower prices. So, let's now look at the situation in today's market. There are currently a little over 100 different mortgage lenders active in the UK market today. These range from the traditional Building Societies to Banks, Insurance Companies and the centralised lenders. As long as the applicant is credit worthy and the property to be mortgaged is good security there is no shortage of potential lenders. As I mentioned earlier, each of these lenders is anxious to maintain or increase their market share and this has resulted in an ever increasing array of new, innovative and competitive products being marketed. Unfortunately, in all of this most lenders seem to have forgotten their existing customer base and most of their marketing activities are directed towards attracting new borrowers rather than looking after their existing customers. The result of this has been to create a two-tier market. Most lenders will offer one set of products to new borrowers and another, less attractive, range of products to their existing customers (this is a generalisation and there are a few lenders who will offer existing customers access to the same products as new customers).