Interest rate cut special: what savers & mortgage holders need do now. Including… why locking in savings can be a winner.

Why locking in savings can be a winner. Should you fix your mortgage now or wait? How to get accepted for a mortgage, and more. Martin reacts as the Bank of England cuts UK base interest rates again from 4.5% to 4.25%, we recorded this literally minutes after it happened and focus on answering your questions about the impact on savings and borrowing (especially mortgages) For savers there’s a warning to act quick if you want to fix. Mortgage holders big questions was fix now or wait – we cover that, but also a fascinating discussion with our mortgage broker guest on what it takes to get accepted for a mortgage whether for a new one or remortgaging, lots of eye opening facts there. In the Tell Us, with summer coming what’s far cheaper to buy abroad (things that you can then bring home that is) And in the Mastermind we find out if Adrian knows why it’s always important to turn your suncream around.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:46Speaker 03

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• 1:49Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Usually, much of it comes from my BBC Radio 5 live show with Adrian Charles, but there's also a whopping load of bonus money-saving tips just for you lucky, lucky podcast listeners. In today's pod, the Bank of England has cut UK base rates again, now from 4.5% to 4.25%. And we recorded this literally minutes after it happened. So we're focusing on answering your questions about the impact on savings and borrowings, especially mortgages.

• 2:27Martin Lewis?

  For savers, there's a warning to act quick if you want to fix. Mortgage holders' big question was, should I fix now or should I wait? Will it get even cheaper? And we'll be covering that. But there's also a fascinating discussion later in the pod only bit with our mortgage broker guest on what it takes to get accepted for a mortgage, whether it's for a new one or if you're remortgaging. And there are eye opening facts coming on that too. Then in the tellers with summer coming soon, what's far cheaper to buy abroad? Things that you can then bring home, that is. And in Money Mastermind, does our Adrian know why it's always important to turn your sunscreen around? And he got a cheeky tip from a listener, but will it actually help him get the answer right?

• 3:12Martin Lewis?

  Play the theme tune.

• 3:20Speaker 05

  So my old friend, where do we start then? So the base rate's gone down from 4.5 to 4.25%, which is obviously is consequential for savers and borrowers. Which do you want to take first?

• 3:33Martin Lewis?

  Well, I think it's just worth looking at this decision. The interesting thing for me is last time it went down by a quarter of a percentage point. The vote was seven in favour of it going down a quarter of a percentage point and two in favour of it going down half a percentage point. This time, a much more split vote. Five members of the nine member panel voted for a quarter of a percentage point vote. Two members voted for a half a percentage point cut and two members said it should be stayed on hold. So there is a really big difference of opinion going on on the Monetary Policy Committee. Some, I presume, want to try and pump towards growth. You know, cutting interest rates tends to increase growth there. Let's just do really basic economic theory on that. If you lower interest rates.

• 4:18Martin Lewis?

  You disincentivise people from saving. So the people who have savings are more likely to spend and businesses probably more importantly than people. And you also make it cheaper to borrow. And if people are borrowing, they're spending the money they've borrowed. So cutting interest rates puts more money into the economy. It pushes for growth, but it can also prompt inflation. In theory. In theory, that's the rough theory of why you do it. You cut interest rates to try and encourage growth, but it can exacerbate inflation, which is probably why a couple have voted because they're slightly worried about where inflation is going to go over the next few months, that they want to keep it on hold. So that's the big picture of what's going on and we'll allow the economists to go through that. Now let's go through product by product. Now we're going to take questions on all of this throughout the show and go into much more detail. But I'll give you the heads up.

• 5:01Martin Lewis?

  We'll start with borrowing and we'll start with mortgages. So if you are on a fixed rate mortgage, there is absolutely no change because by definition your rate is fixed. But it will potentially mean when you come off that fixed rate, the rate you go to afterwards, which is the standard variable rate or the SVR will be lower than it would have otherwise been without this base rate cut. The rate of new fixes may also drop a tad because of this. But because this cut was so widely expected, most of it has already been factored in to what lenders are offering their fix rates at. Because what you have to understand is while variable rates tend to move with the Bank of England base rates,

• 5:45Martin Lewis?

  the rate that lenders set new fixes at tends to move with, keeping it very simple, the market's prediction of long term interest rates. And the market's prediction of long term interest rates has already factored in this cut and likely factored in the next few cuts. There are some analysts saying we'll be at 3% by the end of this year. That seems a bit extreme, some below 3%. But certainly the major expectation from where we are now is that interest rates will go lower. You could argue it is the silver lining to the world economic turmoil is that for mortgage holders, interest rates will go down. Now, if you're on a tracker mortgage, your rate is going to drop by 0.25 percentage points.

• 6:25Martin Lewis?

  If you're on a variable or standard variable rate mortgage, your rate should drop by about 0.25 percentage points. But it doesn't have to be the exact amount and it can take up to a month to find out what it's going to be in for that rate to come in. Now, the reduction of a quarter of a percentage point, it's always difficult to explain it. It's rough because there are lots of variables, but if you wanted an easy rule of thumb to work out the impact on your mortgage if your rate is going down by quarter of a percent, i.e. you're not on a fix, it's equivalent to around £15 a month lower repayments per £100,000 of mortgage. So, you've got a £200,000 mortgage, it would be a £30 a month lower repayment. If you've got a £300,000, it would be £45 a month, very, very roughly, got on a mortgage

• 7:09Martin Lewis?

  calculator to find it exactly. A couple of other borrowing products people ask me about, credit cards. They are mostly unaffected because they're already so high above the base rate. Typical APRs are now 24.9% on a high street card, though it may mean we'll see more and better 0% introductory offers launched. But I can't see, you know, we might go from, we're currently 33 months is the longest balance transfer, it might go to 34 or 35 in the next couple of weeks, but we'll have to wait and see. But it's not a big impact on credit cards. If you've got a personal loan, well, existing loans are unaffected because almost all of them are at a fixed rate. The rate is locked in at the point that you get it. New loans, again, they're set based on fixes, a bit like mortgage rates

• 7:51Martin Lewis?

  are set fixes on long-term predictions. So, again, we might see it shaved down a tiny bit, the rate you can get a new loan at, but I'm not expecting big swings in the market there. So, that's the main borrowing products done. Okay, so... Shall we do savings? Let's do savings. Let's do savings. Variable rate savings, which are mainly easy access, the big ones, people go through those accounts where you can put your money in and take it out whenever you like, will likely drop within two to four weeks by around a quarter of a percent. Some may drop it more than that because they don't have any promises and they might use a competitive advantage of rates dropping everywhere to shave their rates down, especially the big high street banks whose rates are already pants. And I'm also hearing...

• 8:32Martin Lewis?

  That we've had this price war on easy access cash ISAs, mainly due to ISA season, which is around the beginning of April, when we see the end of the tax year and the beginning of the start of the next tax year. So even though base rates are only 4.5%, we've seen the top easy access cash ISAs at over 5%. I think this will probably see the death knell of over 5% savings. Certainly in the cash ISAs, there'll still be some regular savers, which are a loss leading product, you can't put too much money in, that are over 5%. But I think we'll probably start to see rates below 5% now, and they're going to move in the next two to four weeks. Savings rates, they have to notify you in advance, but they can move them pretty quickly. So we're going to see easy access rates, both the ones being offered and your existing accounts, coming down. If you've got fixed

• 9:16Martin Lewis?

  rate savings, it's the same explanation as I gave for mortgages. Fixed rate savings tend to factor in future interest rates, so they're already lower than the easy access rates at the moment. They've factored in much of the cuts. But here's the key thing, I think, for two reasons. If you're looking to fix, I would be fixing today, or if you're listening on the podcast, the moment that you listen to this. Although then it would be today for you, so that was probably a spurious thing I did. Let's move on. Because when a base rate cut happens, while fixed rates get lowered, the way savings providers tend to operate with fixes is they offer a tranche. So they'll say, okay, we've got, I'm making this up, we've got, we'll offer £5 million worth of savings at 4.6%. And

• 10:00Martin Lewis?

  once we've got in £5 million in, then we will look and re-establish what our new fixed rate savings is. So you may be able to get in now, before the rate drops and they reassess based on the new information, at slightly higher fixes than you'll be able to get in a week or two's time. And of course, because it's a fix, your rate is locked in. So the safest bet is to do it today. And also as a general point, because analysts are predicting interest rates are going to come down quite substantially over the next year, but the markets expect that, but they don't factor it all in because it's uncertain. If you're risk averse to rates going much lower and you don't need the money and you don't need access to it, then the safest thing to do if you've got savings is to lock it

• 10:45Martin Lewis?

  away in the highest rate fix that you can get right now, which will protect you from interest rates dropping. Of course, I can't promise, anything could happen. We're in such an uncertain world. You know, we've got the big orange fella in the White House who is capricious and things change and he has such a big impact on the world economy because of tariffs positively and negatively, that anything could change. But I think, again, the risk averse thing now is if you've got savings and you want to keep a higher rate, would be to lock them in on a fix if they're not already.

• 11:08Speaker 05

  Okay, a question on savings from anonymous.

• 11:11Martin Lewis?

  I'm just gonna have a sip of water.

• 11:13Speaker 05

  You, you, can you do it quietly? That's not a sip, that's a proper gulp, what you're doing there. You've got your mouth around the whole neck of the bottle, that's a gulp.

• 11:21Martin Lewis?

  Okay.

• 11:21Speaker 05

  Okay. I have savings of over 80k but only receive 1.36% of my ISA. I've never taken money out of it for years.

• 11:33Martin Lewis?

  That was me blowing my nose, that was me doing a raspberry at 1.3%.

• 11:36Speaker 05

  Now the base rate is changing, my rate will change. Also, can you recommend a better way to invest this money for a better return?

• 11:43Martin Lewis?

  Well, let's just be technical, you're not investing the money, you're saving the money. Investing is where you take a risk in the hope that you'll get better returns, but you're prepared to lose some money. Saving is where you get a fixed amount of interest and your money is protected, but you can't, and you can't lose any. You've chosen savings, I'll keep it in the savings sphere. Look, the problem isn't the fact you've got it in a cash ISA, the problem is the fact you've got it in a pants cash ISA, right? Now, the most important thing to understand about cash ISAs, people think, well, so you put the money in, the money is locked away. It isn't, there are easy access cash ISAs. But also crucially, you don't have to stick with the same provider. You can do a cash ISA transfer. Now, to do that, you don't take the money out, because then it'd be outside of the ISA and you can only put 20 grand in a year, you've got 80 grand, you'd have to wait four years to put it all back in. What you do is you go to a new provider, even

• 12:28Martin Lewis?

  if you're not putting any money in it, and you, when you do the application form, you ask it to do a transfer. What happens then is the new provider takes the money from your old cash ISA and moves it into the new cash ISA at the new interest rate, it stays within the cash ISA wrapper and you're earning a lot more. You're earning 1.3% on 80 grand.

• 12:46Speaker 05

  You can do better than that.

• 12:46Martin Lewis?

  You can be earning, well, getting on up to 5% on 80 grand. So what's that difference? That's £3,300 a year, a bit less, and that will take it. £3,300 a year more interest, keeping it within the cash ISA. Same level of risk, but you're just, you're earning three times the amount. So the most important thing, do not let cash ISA providers hypnotise you into thinking, once your money's in, it's a done deal, and if you take it out, you lose your cash ISA. You have a legal right to transfer the money elsewhere and keep your cash ISA protection.

• 13:19Speaker 05

  Okay, let's bring in Chris in Christchurch. How are you, Chris?

• 13:24Speaker 06

  Fine, thank you. It's very interesting so far, and you've kind of answered a few of my questions.

• 13:29Martin Lewis?

  Good, well, I like it.

• 13:30Speaker 05

  Well, think of some more then, Chris. Don't, don't leave us hanging.

• 13:32Martin Lewis?

  The rest of them.

• 13:33Speaker 05

  You've got, you've, you've, you're booked in now, you'll have to come up with something.

• 13:37Martin Lewis?

  Can I ask you, Chris? Are you, you're, you're a saver because you're in the savings section and we're doing mortgages later. Do you also have a mortgage as well?

• 13:44Speaker 06

  No, I'm retired and our mortgage was paid off before. So this is just purely maximising my savings.

• 13:51Martin Lewis?

  So the Bank of England base rate cut is a negative, not a positive for you, net?

• 13:55Speaker 06

  Yeah, it's a negative. This is what I was gonna kind of ask. I've had premium bonds. Um, I've got 20K in premium bonds. Um, it's been there for quite a while and I have, over the last couple of years, had quite a good return on them, but, um...

• 14:13Martin Lewis?

  Hold on, hold on.

• 14:13Speaker 05

  Don't get him started. Don't get him started.

• 14:15Martin Lewis?

  Hold on, hold on.

• 14:16Speaker 06

  No, I, I won't, I won't say a very good return, but I've had one fairly good win and then nothing at all, and then lots of 25.

• 14:22Martin Lewis?

  But do you add up, and this is what I'd advise anyone on premium bonds to do, do you add up what you win in a year? Forget the month, look at it as a yearly interest. And if so...

• 14:34Speaker 06

  Yeah.

• 14:34Martin Lewis?

  Do you win, how much do you win over a year? And what would the equivalent interest rate be? Probably the answer is you don't do that. No, and the entire, the entire point of premium bonds is, is, you know, to reward you occasionally with a, an above average RIN that makes you think, heh heh heh. It's a dopamine thing. And that sticks in your head and what you forget is all those months when you don't win anything. But go on, I'll let you finish your question before I, I talk about premium bonds. Go on.

• 14:57Speaker 06

  Yeah. So I was gonna say, I was, I've been toying over the last month. Um, I follow your blog quite a lot and I've done, the end of last year, I put, uh, maximize my ISA with a chip investment.

• 15:10Martin Lewis?

  Yeah.

• 15:10Speaker 06

  So I'm looking for this year's ISA.

• 15:12Martin Lewis?

  Just so people don't know, chip is one of the top paying cash ISA providers. Sorry.

• 15:16Speaker 06

  Thank you very much for that. So I've got the thing on that.

• 15:19Martin Lewis?

  Good.

• 15:19Speaker 06

  Um, and so this year, I've been, over the last month, I've been, every couple of days going in and looking at top rates and they keep changing. And with the interest going down today, is it still fixed ISAs is the best way forward? And when really would be the best time to sort of take the money out of my premium bonds and put it into an ISA?

• 15:46Martin Lewis?

  Well, let's just do the premium bond comparison. The current premium bond prize fund rate is 3.8%, but I strongly suspect that is going to drop in the next, you know, next couple of months on the back of this base rate cut. But we'll, I'm going to examine it as if it stays at 3.8%. And what does that mean? Well, that means for all the money in premium bonds, 3.8% of it is given out in prizes, in given out in interest prizes each month, the smallest of which is £25 and the biggest of which is a million pounds. But for everybody who wins a million pounds, quite a lot of people have to win nothing. Now, what, when you look at the probability distribution of premium bonds, what it actually says is if you look at the median person, so if everybody remembers their schoolyard maths, there's mean, median and mode. Mean is when you add up everything and divide

• 16:29Martin Lewis?

  it. That's what the 3.8% prize fund is. But I look at the median person. So in other words, if we looked at everybody who has the amount of money you have in premium bonds, how much would the person in the middle, you know, 50% down the lines from top winnings to bottom win, median earnings are always lower than the prize fund rate at every level. So if you have £20,000 on average, because it's a decent amount, you're probably, and I haven't got the number in front of me, I'm going to make this up from past knowledge, but you're probably on average likely to win around 3.5 or 3.6%, and that's tax free. But then again, your money in a cash ISA is tax free anyway. And so you asked about

• 17:09Martin Lewis?

  top fixed rate cash ISAs. The top at the moment over one year pays 4.26%, and that's locked in. The top over two, which is Oak North, the top over two years is progressive at 4.3%. If you're listening on the podcast, these could have all changed. So go on to a reputable source which will give you the updated interest rates. I'm sure you can all work out places that you can go and get that information for yourself. So certainly on balance of risk, it would actually be quite unlikely for your premium bonds to beat a cash ISA. Because even though it's only a 0.3, 0.4% differential, to overcome the fact that you've got someone with typical that wouldn't win it, you'd have to be pretty lucky to beat

• 17:49Martin Lewis?

  the top rate cash ISA. Now, the big question for you is, do you have other savings that you pay tax on?

• 17:57Speaker 06

  I do have other savings. I've got about £30,000 in a first direct bonus account, which currently yields me about £120 a month.

• 18:11Martin Lewis?

  Oh, so what a mother, that's worth the nap. So you've got 30 grand and you're earning 1,400. So, okay, that's a decent, you've got a decent interest there. It's about 4%, isn't it? Four and a half percent?

• 18:20Speaker 06

  Yeah. So this is why I'm toying with what to do with this 20 grand. But then again, the ISA is tax free, isn't it?

• 18:28Martin Lewis?

  Yeah, but let's just remember, you're paying, you will be, are you a non taxpayer otherwise?

• 18:34Speaker 06

  No.

• 18:35Martin Lewis?

  So you, so you pay tax. So you only have a thousand pounds a year. I'm guessing you're a basic rate taxpayer. So you have a thousand pounds of a year of interest that you can earn tax free. And you're doing that already. You're using that allowance in your first direct account because you've got over a thousand pounds a year of interest coming from that. So we need to protect the rest from tax. We don't need to, but I mean, that's what's the most lucrative way to do so. So, yeah, I mean, of which the two main ways are premium bonds or cash ISA. And I would use my cash ISA before I use premium bonds. So, yeah, I mean, the easy access accounts, you know, they're up near 5%. I think they will drop. The top one year fix is a 4.26%. The reason I was asking about, and for everybody listening, the reason I was asking about your tax situation is this, and it's worth me explaining this.

• 19:16Martin Lewis?

  Currently, the top easy access cash ISAs pay more than the top easy access normal savings. So irrelevant of your tax position. If you're choosing between them, you want to put it in the cash ISA, even if you don't get a tax gain from cash ISAs because they're tax-free savings, you'd put it in the cash ISA because they pay higher interest rates. But when it comes to fixed rates, the top normal fixed rates pay more than the fixed cash ISAs. So top one-year fix at the moment is tandem at 4.55% in a normal savings. Top one-year fix is Oak North at 4.26%, so 0.3 percentage points lower in cash ISAs. So if you weren't paying tax, I would have said put your money in

• 19:59Martin Lewis?

  normal fixed savings. But because this is about protecting it from tax, yes, something like Oak North at 4.26% absolutely is worth going for. And it also has the advantage that top fixed rate cash ISAs, I mean, not specifically Oak North, whatever the top one-year fix is when you go to do this, fixed rate cash ISAs, you're able to withdraw your money if you needed to in an emergency. So that would seem to be the right route for you to be going through at the moment. It's worth noting, most of the fixes, though, don't allow you to put more than 20 grand in. They don't allow transfers to go in. So your other cash ISAs, is that all, that's all at chip at about, whatever it is, 4.7%?

• 20:38Speaker 06

  Yeah, that's the chip one. I did that. I did that in March, just before the end of the financial year.

• 20:44Martin Lewis?

  So remember, that's variable rate. Keep your eye on the rate. It's still paying a good rate. It could drop at any point, in which case you might want to transfer it, move it elsewhere. But I mean, it sounds like, first of all, well done. Everything you're doing is all top-notch. I mean, I'm not dealing with baking.

• 20:58Speaker 06

  You're my guru.

• 21:01Martin Lewis?

  Oh, well, thank you. Well, you've already baked the cake for yourself. All I'm doing today is putting a bit of icing on it.

• 21:06Speaker 05

  No woman has ever said, no woman has ever said that to me. In fact, no man has ever said that to me.

• 21:11Martin Lewis?

  You, you're my guru at some things, Adrian. You just might need to give me a little bit of time to think about what.

• 21:17Speaker 05

  All right, thank you very much indeed. Thanks for that, Co. We've got, actually got one more question from Sarah. I have an 18-year-old daughter. Should she get a Help to Buy ISA or whatever the government call it now?

• 21:31Martin Lewis?

  Can't get a Help to Buy ISA, it's now called a Lifetime ISA and it is a slightly different product. So, very simply, if your daughter plans to buy a first-time home and is pretty sure that she's going to do it and it's going to be a home that costs under £450,000, then putting money and saving money into a Lifetime ISA is really powerful because you can put up to £4,000 a year and the state will add 25% on top. In other words, if you max it out, the state will give you a grand on top of the four grand every tax year until you buy it. You need to have it open a year before you can buy a house. The key problem, if you withdraw money from it for any other reason than buying a qualifying first-time house, and qualifying means a house under £450,000, you're charged

• 22:14Martin Lewis?

  an effective penalty of 6.25%. So you're actually, the state will take some of your money if you withdraw it. Alternatively, you could leave it there until you're aged 60 and just take the money out when you're aged 60 and you won't pay a penalty. But that's a long time away. Lifetime ISAs are only for those aged 18 to 39. So I would, and go and do some reading on this, but in simple terms, if you're going to buy, if she's definitely going to buy a house in the next five, 10 years, and you're in an area where it's very unlikely those prices would be above 450 grand, I would absolutely be putting money in there. If you're not, I wouldn't be. But one thing I would do, even if you think you're not going to do it, and I would advise every parent of an 18, 19, 20, 21-year-old,

• 22:53Martin Lewis?

  put a pound in a Lifetime ISA. Here's the reason why. To get the bonus, you have to have had the account open for a year. So let's just suppose you put a pound in now, you don't think you're going to buy a house. In a year's time, something's changed, you're going to buy a house. You could then put £4,000 in, and then pretty quickly, within a week or two, you would get the £1,000 bonus and you could use it because you've had it opened over a year. So everybody should have one opened. What's the risk of doing this? Well, the top-paying Lifetime ISA is 4.7%, but the risk is you'd lose 6.25%. I personally think the risk of six and a quarter pence, which is all you're risking if you put a pound in, is worth it to have the facility there if you need it. So if you agree with that, get a pound in for younger people in a Lifetime ISA so they've had

• 23:38Martin Lewis?

  it open, presuming they have never owned a house, that is. There's lots more of your savings questions to come later on in the podcast only bit coming at the end.

• 23:49Speaker 05

  Interesting development on the mastermind question and Adrian from Shipstone.

• 23:53Martin Lewis?

  You'd better not be giving it away, Adrian. If you're giving it away, you're banned from listening again.

• 23:57Speaker 05

  No, no. Well, he's, he's saying.

• 23:59Martin Lewis?

  I don't have the power to do that.

• 24:00Speaker 05

  He's given me some tactical advice.

• 24:01Martin Lewis?

  Okay, go on.

• 24:02Speaker 05

  Because my name's Adrian, I'm not telling you what it is. I'll tell you whether it works. We'll find out whether this tactical advice works later.

• 24:07Martin Lewis?

  I don't like people to, you should, I don't like people teaming up with you.

• 24:10Speaker 05

  I was, I was just thinking, I shouldn't share this because I know you.

• 24:14Martin Lewis?

  I'm going to change the question. I'm going to change the question.

• 24:19Martin Lewis?

  Damn you, Adrian.

• 24:21Speaker 05

  Adrian, thank you.

• 24:25Speaker 05

  What's the tell us this week?

• 24:26Martin Lewis?

  Okay, so it's a nice little tell us, which is celebrating the fact we're coming into summer. With summer approaching, what have you found substantially cheaper to buy abroad in the last couple of years? Now, this is things for bringing home. Many people have answered things not for bringing home, even if quirky. Include the location you bought it and the price differences if possible. That was the exact text that I sent out there. So what have you got?

• 24:49Speaker 05

  Joe says, Italian ground coffee, two euros forty-five on offer at 250 grams.

• 24:55Martin Lewis?

  Probably four or five quid here, I would have guessed.

• 24:57Speaker 05

  Yeah.

• 24:57Martin Lewis?

  I've got Brian. Favorite wine in Tesco, 10 bottles, 130 quid. Favorite wine in Mercadona, Spain, 10 bottles, 35 quid. Box well as the noise from the bottles in the back for a 1,300 mile car journey can get a bit annoying.

• 25:12Speaker 05

  Mm-hmm.

• 25:13Martin Lewis?

  Big saving there, yeah.

• 25:14Speaker 05

  Hard drive enclosure. Not sure what that is, but whatever it is, 289 quid in the UK. Purchased direct from the maker in China online, 180 pounds.

• 25:24Martin Lewis?

  Wow. A hard drive enclosure. Do you not remember the Enclosures Acts? That's where they, that's where they penned all the hard drives into on air and they took away, they took away the hard drives from, from the people who didn't need it in the, in the 14th century.

• 25:34Speaker 05

  It reminds me of a friend of mine who for Christmas got 32 thingies of RAM. As a present.

• 25:40Martin Lewis?

  Nice, got thirty meg of RAM, thirty two gig of RAM, nice. Sarah, Cyprus is significantly cheaper for most day to day living and it's staggering how much cheaper food, booze and cigarettes are. We were out last night in an amazing restaurant for seven people, platters of meat, seafood, wine, beer, side dishes for around fifteen quid a head. Very good, Sarah, but this is about things you can bring home, Sarah. Little bit of a telling off there, but thank you for replying.

• 26:05Speaker 05

  Alejandro, little boxed sangria, France four euros, UK fifteen quid, same product from same company.

• 26:14Martin Lewis?

  Okay. Claire, I just bought an igloo coolbox back from America, cost me twenty five dollars in Walmart, the same over here was eighty pounds, so it saved me about sixty quid, plus it kept all my breakable items safe on the journey home, so win win. I'm gonna do, I'm just gonna do my tip on this, which is actually, is quite interesting where you go on this. This is my Zara tip. Now, Zara, international retailer, same products in every country, is substantially cheaper in Spain and Portugal than in the UK. And more so, you can go on to the Spanish Zara website, it has an English language setting, so you can actually look at the Spanish Zara website before you go, if you're travelling

• 26:58Martin Lewis?

  to Spain or Portugal, and see the prices there compared to the prices here. So if you have stuff you wanted to buy in Zara and you were going to Spain or Portugal, for example, and this is from last year, these prices, because I haven't updated it since, but it always works, I first wrote about this in 2014. A hundred percent linen suit blazer is eighty nine ninety five in euros in Spain, from the UK website, the same suit a hundred and nine pounds in pounds. So not only is it cheaper, the euro price is lower than the pound price. Now, if I go on to that, let me give you an example, because this is quite telling. We'll take a woman's floral organza dress, Zara UK, forty six quid, Zara Spain, thirty

• 27:38Martin Lewis?

  six euros, which is thirty one pounds roughly, Zara France, forty six euros. So it's more in France than in Spain, although it's still cheaper than the UK. Zara Greece, same price as Zara Spain, so it's good. Zara Italy, same price as Zara France, so better than England but not worse. So if you're going to Greece, Spain or Portugal. And you're going to Zara on almost, I mean, I've never seen anything where the rule doesn't work. The euro price tends to be lower than the pound price. So certainly, if you're going and you were planning to shop at Zara before you go, I would wait and do it once you get there because it's going to be a lot cheaper.

• 28:12Speaker 05

  And just finally, there's one from Ali, and this is right up my alley. It says, this is going to sound daft, not to me it doesn't Ali, but cling film and tin foil from Istanbul. They sell them in the supermarket in large sizes and it's so much cheaper and better than here as the packaging has better cutting tools on it too. It makes me want to go to Istanbul just for that.

• 28:35Martin Lewis?

  Well, and that's a wrap on this section.

• 28:38Speaker 05

  Very good. Brilliant.

• 28:44Speaker 05

  Mortgages then. Where are we? What do we need? What do we need to reflect on with that? I mean, you've kind of covered this already.

• 28:51Martin Lewis?

  Well, we know that variable rate mortgages are going to drop, although if it's a variable, we don't know it'll drop by exactly a quarter of a percent. It will if it's a tracker. Fixed rates, well, you're fixed, but once your fix ends, that price, the rate that you'll move to afterwards should drop, but no one should be on the standard variable rate. That's about seven and a half percent at the moment. Most people should be getting another deal. The question, I think, most people ask me about this is if I'm getting another deal, should I fix now? Or is it going to get even cheaper and should I wait to fix? Now, we have joining us to help because mortgages are complicated and it's a regulated area is Jane King, who is an independent mortgage advisor with Ashridge Private Finance. Hello, Jane. Welcome on board.

• 29:31Speaker 07

  Good morning, Martin. Good morning, Adrian.

• 29:33Speaker 05

  Hiya.

• 29:34Martin Lewis?

  Hiya. So what we've got?

• 29:35Speaker 05

  Rebecca, I'm due to remortgage next year. Worrying timers might be about to lose my job. Sorry to hear that, Rebecca. And the rate we currently have is 1.87%. So expecting a big rise. Are there any predictions about whether there might be a downward trend of mortgage rates into next year?

• 29:52Martin Lewis?

  So it's a very interesting question. First of all, I'm sorry to hear about your job. You've done very well to retain such a cheap, low rate mortgage. You probably had a long term, maybe a five year fix, and you locked in that rate. You've done very well out of it. But certainly when that fix ends, you're going to see Bill shock and your rate is going to jump quite substantially. So what you need to do is be prepared and I'd start looking six months ahead of time to be prepared to get a new mortgage. Now, what's interesting here is I can talk to you about UK base rate predictions. Many analysts are saying 3% by the end of the year, some below 3% by the end of the year. So a series of cuts. We're currently at 4.25% in April, you know, expecting five more cuts potentially this year.

• 30:33Martin Lewis?

  The question is, how do those base rate cuts factor into what fixed rate mortgages you will be able to get? Because as I said earlier, fixed rate mortgages are already looking ahead to the future in the pricing they're set at now. So markets' long-term expectations aren't just crystal ball gazing, they have a practical, real impact on the price that you can get a fix at right now. So the perfect person to ask is Jane. Jane, what do you think is going to happen to mortgage rates? Interest rates are dropping, are we going to see fixed rates drop? And by how much so during the year? What are you think, what's your thinking on this?

• 31:10Speaker 07

  Well, it's anybody's guess, isn't it? I mean, I sit in on meetings with bankers, economists, and nobody really knows what's going to happen. Although we've had fairly stable base rates over the past few months and even past year, fixed rates have been undulating, up a bit, down a bit, up a bit, down a bit. So it's very difficult. I mean, as we all know, a big predictor of fixed rates or interest rates in general is inflation. However, fixed rate lenders are sometimes drop and increase their rates for various other reasons. So if you're a lender with a big lump of money that you can't lend, we've had the stats this week that there's been a loss of volume in transactions with sales after the stamp duty break.

• 31:54Speaker 07

  So they may have a lot of money lying around that they need to lend and the only way they can lend it is to drop the rates. So we're not just looking at monetary reasons, we're also looking at other things like service standards and, you know, whether the money is available. So it's very, very difficult to predict. But again, I'm sorry that you might lose your job and what I would just mention at the same time, if you really think you're going to struggle, I would urge you to contact your lender as soon as possible to talk to them. There's lots they can do and so please don't worry about it too much.

• 32:27Martin Lewis?

  Yeah, I've been talking to lots of other brokers too about what's going on with mortgages. And all of them seem to say this is a decent time to get a mortgage. That doesn't help, doesn't help the questioner. Because approvals are down on the back of stamp duty, the stamp duty going up. People try to get in before the deadline, so there's less demands. And there's a negative economic outlook. So lenders are trying to offer better deals and more generous loan sizes. And we've also seen some more flexibility being given by the regulator in that mortgages on the mortgage companies on their affordability charts. If I look at, look at where we are with mortgage rates right now, the cheapest that we're seeing at the moment, we're seeing it down at 3.6% for the very cheapest two-year fix, 3.8% for the cheapest five-year fix. That of course with people who, you know, with great credit scores and, and great loan

• 33:12Martin Lewis?

  to values, that just gives you an idea. But let's just think about that. You can fix for five years at 3.8%. The base rate is now 4.25%. So you can fix below the current UK base rate. I think that is worth looking at where we are competitively at the moment. The honest, practical answer, Rebecca, is there's not much you can do right now anyway. Because you want to hold on to that fix for as long as you possibly can. And it does look like, you know, because UK interest rates are predicted to come down, if those predictions are true, mortgage rates won't be as bad as they have been by the time that your fix comes to an end. That's, that's the potentially good news. Mortgage rates could be, you know, roughly where they are now, the cheapest rates in the, in the 3% or maybe even in the 2% if you were lucky.

• 33:56Martin Lewis?

  And, and UK base, for you anyway, and UK base rates would come down a lot. If you'd been doing this, you know, way back in the, the mini budget in July 2023, you'd have seen fixed rates up at around the 6% level. So they are a lot lower than they were. So the bill shot you're going to get isn't as big as it would have been. But I think it is probably unlikely that you're going to see rates in the 1%, which is you've got now. So hold on to that when you can. And if you have any spare money, you can look at reducing your mortgage, overpaying when you can, you know, putting money aside so that you won't need to borrow as much when it comes to that remortgaging point. I'd suggest you did that too.

• 34:31Speaker 05

  Gemma in Lytham says she's a dance teacher, so the only numbers she knows are five, six, seven, eight. Very good.

• 34:37Martin Lewis?

  Well, that's sort of the percentage you're getting on the standard variable rate at the moment.

• 34:40Speaker 05

  I've got a fixed mortgage rate that ends this month. How many years do you recommend I fix the mortgage rate for? Well, this is kind of what we were just talking about. Current finishes.

• 34:49Martin Lewis?

  It is slightly different.

• 34:51Speaker 05

  Slightly different, yeah. But, I mean, what I'm getting at, it still demands some kind of knowledge of macroeconomics, a kind of level of expertise. Unless you happen to work in the city, 98% haven't got.

• 35:03Martin Lewis?

  I disagree.

• 35:03Speaker 05

  Okay, but, okay.

• 35:05Martin Lewis?

  I disagree because what you're doing is you're saying, I need to base the decision on an unknowable factor. The unknowable factor is what's going to happen to mortgage rates over the next five years. And I'd say when it comes to fixing, one of the big things you need to look at is you need to look at yourself. So you need to look at how much do you value price certainty? How much do you value knowing exactly what you're going to pay? And the more risk averse you are, then the more you should, if you can fix at a rate that you can afford, then the more you should be, first of all, hedging towards fixing and secondly, hedging towards fixing for longer.

• 35:41Speaker 05

  Yeah.

• 35:41Martin Lewis?

  Because if you can lock in on a rate that you can afford, then you close your eyes to the fact that you might have done better in hindsight and you lock in on a rate that you can afford. So you have to look at both the externals and the internals.

• 35:51Speaker 05

  Okay. Just her number, I mean, her numbers, for our purposes, they might not be totally relevant, but the current deal finishes at the end of June, 29 years to go, loan to value, 150k still to pay on a house worth around 370k.

• 36:06Martin Lewis?

  So the loan to value, which is the absolutely crucial figure, how much of your home's current value, so if your house price has gone up, it can be beneficial, you're borrowing, the lower the loan to value, the better. As she's under the 60% loan to value, which is where you get the cheapest mortgages, below 60%, she's doing well on that. Let's head over to Jane though. What do you think on this, Jane? Where would you go? Two or five year fix, having heard that information? And we understand that you can't, you know, this is not a full fact, fine, just general points for people.

• 36:31Speaker 07

  Well, I mean, I agree with you, Martin. I think the borrower has to look at their own personal circumstances and objectives. So, for instance, you know, if they're living in a house that they love, they've got children at school, you know, for the foreseeable future, then I think you have to look at where we are now and not what you may think is happening in the future. So if you're settled, no plans to move, then obviously it would make sense to fix for a long time. And as Martin says, close your eyes to what you may or may not do, because we all don't have the benefit of hindsight when this comes. If you're thinking, well, actually, it might be, I may, you know, change jobs in a couple of years, I may relocate to the other end of the country, I may do this, then a longer

• 37:14Speaker 07

  term fix is not for you. It's a shorter term fix would suit you better. So I think you've got to ignore what may or may not happen to fixed rates, because nobody really knows, and look at where you are now and what you are now and what the rates are now. And if we can get, as Martin said, your loan to value is is under 50%, so you'll be getting the good rate. So I would assume that you could get something under 4% right now. And to me, that would be not a bad deal.

• 37:37Speaker 05

  But how many years do you recommend you fix the mortgage rate for?

• 37:39Martin Lewis?

  You'd go for five, would you? Or would you go, five gives you some, going for 10 means you're really locked into the property you've got.

• 37:46Speaker 05

  That's what I'm talking about. Because when I had to make that decision, when I first bought a house, I first got a mortgage, I was presenting working lunch, business programme. I remember one of the top Forex guys in the city came on. I said, look, I've been offered this percent for five years, this for seven years, this for 10 years. And he, which of those? And he went, I'll go for that one. So I went for that one. But so that that's kind of what I'm getting. I had access to his advice.

• 38:12Martin Lewis?

  Yeah, but he didn't know either.

• 38:13Speaker 05

  No, he didn't. But he had a better idea.

• 38:15Martin Lewis?

  No, all he did is, all he did is help persuade you to make a decision. You made a decision, you got on with it, and you're happy you'd made a decision, the decision with the other. What people don't know, and you won't know, is that, you know, The most important thing, it was actually the Oasis song was written about interest rates dropping. Don't look back in anger was just simply their message to tell mortgage holders that you make the right decision, then you don't look back in anger at what's happened on the back. Jane, we should let you answer. We were asking you a question. How many years?

• 38:41Speaker 07

  Well, the other thing you might want to do, because your mortgage is quite low in the big scheme of things, is maybe convert to a tracker for a little while. See what happens to rates over the next six months to a year. A lot of trackers come without early repayment charges. So you could do a wait and see and then hop off the tracker into a fixed rate further down the line.

• 39:01Martin Lewis?

  What are the cheapest trackers right now? What rate roughly?

• 39:04Speaker 07

  They're sort of bank base rate plus 0.4.

• 39:08Martin Lewis?

  So you'd pay more to track then now, wouldn't you? You'd be paying?

• 39:11Speaker 07

  You would, you would, but you've got the flexibility. And if it's a small mortgage, it may only equate to a few pounds a month. So it might be worth a gamble, might not. The lady might just want the peace of mind of a fixed rate. I get that. So it's all really down to what their attitude to risk is over where rates are going to be in two years or five years.

• 39:29Martin Lewis?

  Adrian, I just want to do something with you, which I think is really instructive on what you were asking about a moment ago. So we're just gonna, we're gonna play a game. This is important. Now imagine I have a coin in my hand. I don't, I didn't bring one in. I've got a coin in my hand here, and I'm going to offer you a bet on the tossing of this coin. It's a totally fair bet. It's straight. Here's the deal. If you win, I'll give you 100 quid. This is not a real bet. I'm not really offering it. There's no contract. If I win, you only have to give me a pound. Okay? Would you take that bet?

• 40:01Speaker 05

  Yeah.

• 40:02Martin Lewis?

  Right. So let's toss the coin. Call.

• 40:03Speaker 05

  Heads.

• 40:06Martin Lewis?

  It was tails. Was it a bad bet?

• 40:09Speaker 05

  No.

• 40:09Martin Lewis?

  No. You had a good bet, made on the information that you'd had. You had a bad outcome. And people often confuse bad outcomes with bad decision. So this is where we're going with fixing. If you take a decision to fix based on you want long-term price uncertainty at a rate that you can go, and then interest rates were to drop so that it would have been cheaper in the long run, people then go, I made a terrible decision. No. You made a good decision.

• 40:39Speaker 05

  Yeah.

• 40:39Martin Lewis?

  You had a bad outcome. And unless we have clarity of decision making between decision and outcome, anything can go against us. We don't know the future. Should I marry him or her? You might make a good decision. You might have a bad outcome. All of this, all of dealing with uncertainty is taking the best decision you can on the information you have at the moment. And as long as you do that right, you mustn't beat yourself up because if you do, you tend to make the wrong decisions more frequently in future because you become biased and risk averse when you shouldn't be. So those people asking, should I fix now? How much can you ride the market? How much room do you have? And the more risk averse you are, the more fixing is right for you, even if it doesn't work out right in the longer run.

• 41:18Speaker 05

  Just before we get on to Mastermind, just one question from Fiona, I think is interesting. Is it better to overpay on a mortgage while it's fixed at a lower interest rate to reduce the amount I owe on it or save the money in an account?

• 41:30Martin Lewis?

  So a very simple rule of thumb, if your mortgage rate is lower than the amount that you can earn on savings, which you'd be lucky if it is, but if it is for some people, then what you would be better to do is to put the money aside in a savings account. Now, you might put it in easy access, you might put it a fix, as long as that money matures, if it's in a fix, before you need to remortgage. And you would build up your savings so that at the point of remortgage, you could use that to reduce your mortgage. But in the meantime, you would actually earn more savings interest, as long as you've got to look at the after tax rate on savings, earn more savings interest savings than paying off your mortgage. If your mortgage rate is higher than the amount you can earn after tax on savings, you would generally be better to pay off the mortgage. Jane, do you agree on that?

• 42:12Speaker 07

  I absolutely agree. It's a perfect rule of thumb. The only thing I would add to that is if it's in a savings account, you can always draw it out if you have some sort of financial emergency and people do get these sort of things. Whereas once you've made your overpayment, you obviously cannot get that money back. So it's got to be money that's not in your rainy day emergency fund.

• 42:31Martin Lewis?

  Exactly. You should always have a three to six month emergency fund at the same point.

• 42:42Martin Lewis?

  Welcome to Money Mastermind. The current score in this three option multiple choices. Adrian has got nine right and 15 wrong. But you're on a good run at the moment. So let's see what you can do here.

• 42:52Speaker 05

  Okay.

• 42:53Martin Lewis?

  Now, Adrian, purely by chance, when trying to think about a question that would be suitable for you, I started thinking about things that give information out of their backsides. And lo and behold, I realised after the recent bout of good weather, I thought of sunscreen. Turn a bottle of sunscreen cream around and there's usually a three letter code on the back, which can be useful. So what I want to know is what does it stand for and why is it useful? You have three options. Is it A, the PLA, the product licence authentication? This indicates the specific ingredients. So if two products have the same PLA, you know it's the same thing and you can see if

• 43:38Martin Lewis?

  you can buy the same thing for cheaper elsewhere under a different brand. Is it B, the PAO, the period after opening, the length of time after opening a sun cream its protection will last for? So that therefore you can work out how long it's still valid for and not have to buy a new one if you know it's still going to work. Or is it C, the PUN, the photodermic ultraviolet norm? The PUN is a regulated measure of how long one application should provide protection for. So you can compare which will last longer, so which is better value. Is it A, the PLA, B, the PAO, or C, the PUN?

• 44:19Speaker 05

  So the second, those three, you're saying one of them, only one of them is real?

• 44:25Martin Lewis?

  Only one of them is real.

• 44:26Speaker 05

  Okay. I can now reveal what the advice I had from Adrian in Shipstun. He said, Dear Adrian, in honour of Adrians across the country, when Martin's Mastermind comes around, never go for the middle option. It's never the middle option.

• 44:43Speaker 05

  From Adrian in Shipperton. Well, well, let's see. I think it's, I would have, I, I wouldn't have gone for the middle option anyway. Cause I wanna, I wanna honour. Yeah, I wanna, I wanna, I need to honour Adrian's advice. Be it right or wrong. I'm honouring the rights of a fellow Adrian. I think it's A. I think it's the first one.

• 45:01Martin Lewis?

  You think it's the product licence authentication? Okay. Well, first of all, C, the P U N is different when you look at it on paper. It's called the.

• 45:11Speaker 05

  Pon.

• 45:11Martin Lewis?

  The pon is completely made up. There is no photodermic ultraviolet norm measure whatsoever. A, well, actually on many medications and substances, they do have a P L code, the product licence code. And if the product licence code is identical, then it is exactly the same thing. You can often find it with hay fever tablets. So you can buy the same thing for cheaper elsewhere. Cause if they have the same P L code, it's the same tablets regardless of the branding. But A wasn't the P L code, it was the P L A code. The product licence authentication.

• 45:42Speaker 05

  That's hard.

• 45:43Martin Lewis?

  Which I made up. So the correct answer, I'm sorry to this Adrian and the other answer, and give me a nut, huh? Is the product, the period after opening, the P L O A O, which is the length of time after opening its protection with last fall. When you get sun cream, look at the P O O, P A O. Note, if you can put on a marker on your sun cream, the date you opened it. So you then know how long it is still valid and still safe for.

• 46:08Speaker 05

  So that's different to a used before.

• 46:09Martin Lewis?

  It's a different, it's a period after opening that you can use it for. And what this does is many people, when they go away the next year, they go, oh, I can't use it. It's out of date. Well, actually some sun creams have a 24 month P A O. So you could use it for two years. And if you put the date on it, when you open it, you then know how long it's going to last for. And you don't need to buy another one.

• 46:26Speaker 05

  Did you know what that text said from Adrian and switch the order?

• 46:29Martin Lewis?

  I promise you, I had no idea. I don't, I don't have any contact.

• 46:34Speaker 05

  No, but you've got a producer in your ear.

• 46:36Martin Lewis?

  Simon, producer Simon would not do that. That was completely legit. Adrian, you've now got nine right and 16 wrong. And to both you Asians, yabi sucks.

• 46:49Martin Lewis?

  Right everyone, we're in that bit after the show where it's podcast only. Normally Producer Simon asks me questions, but I've got someone to ask questions today. Muahahaha. So Jane King is an independent mortgage advisor with Ashridge Private Finance. And Jane, I've got lots of mortgage questions before I come on to the savings questions, which I'll get Producer Simon to ask me. Anyway, too much of the underbelly of the show, let's just get on with the questions. So, the first one is from Karen, who says, "Hi Martin, or hi Jane. My son is due to complete on his first house purchase next week. He hasn't exchanged contracts yet. Should his broker be looking for a different mortgage in view of the announcement today from the Bank of England?" Thank you Karen.

• 47:30Speaker 07

  Well, I mean, my gut feeling would be to say no. It's too close to completion. You could end up with a chain collapsing, you could end up with not being able to get a better deal somewhere else because of restrictive criteria. There could be all sorts of reasons and that close to completion. And bearing in mind that you probably wouldn't say very much really on a quarter point reduction, I would say no.

• 47:53Martin Lewis?

  Yeah, and my view is pretty simple. I mean, we've had a quarter percent reduction. So, look, first of all, if your son's getting a variable rate mortgage, the rate's going to come down anyway. If he's getting a fixed rate mortgage, well, probably most of that quarter of a percent has been factored in to the mortgage rate that he's getting, because this was not unexpected. All of us in the industry, we were all certain there was an interest rate coming. The question was, was it going to be a quarter of a percent or a half a percent, not was it going to be nothing or a quarter of a percent. So, this, and that gets factored in to what's going on in the mortgage rate. So, fixed rates may come down a little, but it's going to be, it's not going to be the full quarter of a percent, I wouldn't have thought, is it Jane?

• 48:34Speaker 07

  No. At the moment, they're going up and down by point one. .01, they're very, very small increments of reduction. So it's not going to reflect in any huge savings anyway. But my concern would be more the time scales than any sort of few pounds he could save here and there.

• 48:51Martin Lewis?

  Yeah, so the general consensus, Karen, is get on with it and congratulations to him in his first home. I hope he's happy. I presume he's living there for a long time and he's done all his budgeting so that he can afford the mortgage. And just get on with it, smile and now deal with whatever he's got to do to make it be the place that he wants to live in. Next question is from Robin Debben. Looking to buy a house this year and take out a small mortgage. I have two ISAs, my wife's and mine, that have a combined 160,000 in them earning 4%. Great, well done. Is it worth keeping one of them and borrowing more money at a lower interest rate? Worried what the government will do to ISAs which will take longer to build an ISA. So that's an interesting question. I think this is probably more me than you, Jane. So I'll start it and then you come in if that's all right.

• 49:36Speaker 07

  Absolutely. Yeah, absolutely.

• 49:37Martin Lewis?

  Okay, so you're quite right. There is a realistic chance that in the autumn budget this year, the Chancellor, Rachel Reeves, will drop the amount that you can put into cash ISAs. Currently, you can put 20,000 pounds into ISAs in a year. And if you're just using it for a cash ISA, you can put the whole amount into a cash ISA. The prediction is it could be as low as 4,000 pounds. Nobody knows. The decision hasn't been made, but is absolutely 1% certain. It has been looked at and the policy is being discussed. If it were to happen, we don't know whether it would happen immediately in autumn. They could delay it so it starts, so they announce it in autumn, but it starts on the 1st of January. We've seen precedent for that before on ISA decisions.

• 50:19Martin Lewis?

  Or it could start at the start of the following tax year, so the 6th of April 2026. But I think there is a realistic chance of that happening. Now, please do not read that as me saying it is going to happen. I'm saying it is a realistic chance and you should look at it. So your question here is, should I keep some money in an ISA? Because if they reduce the cash ISA threshold, if I take the money out of the ISA to reduce my mortgage so that I need a smaller mortgage, it's going to take me a long time to get that amount in if they drop the threshold down from 20,000 to 4,000 pounds. I think it's a very legitimate question. The first thing I would say is We have to work out how much you are going to gain on the mortgage.

• 51:02Martin Lewis?

  So you're saying you're taking out a small mortgage, which I presume means that you have a good loan to value ratio. Your loan to value ratio is lower than 60%, in which case, if it wasn't, then using extra savings to reduce the mortgage becomes really valuable, not just because you have a lower mortgage, but because potentially it can reduce the interest rate on your mortgage because you have a lower loan to value ratio. I suspect from what the phrasing of your question, that isn't an issue for you. Also, the question is what rate of mortgage you can get. We are talking about cheapest mortgages on the market being below 4%. So if you've got a 4% cash ISA, I don't know if that's fixed or variable, we'll assume it's fixed, and you've got the rate locked at 4%, if the mortgage borrowing is at less

• 51:46Martin Lewis?

  than 4%, then actually, you're practically better to keep the money in the cash ISA too, because the mortgage is costing you less than you're earning for the equivalent money in savings. So for me, it probably does sound quite a sensible idea to keep some of the money in your cash ISA because of the risk of cash ISA thresholds being dropped in your particular situation, and the fact you're not going to gain that much by reducing the mortgage. Feel free to disagree, Jane.

• 52:14Speaker 07

  No, I absolutely agree. I think actually, what I would do is, if I was to do that, then yes, I would try and bring my loan to value down as low as possible. And from what you say, a small mortgage, I would assume, as Martin did, that it would be under 50%. And then if you find that rates go up in the future, or the risk to ISAs doesn't materialise, then you could also maybe take out small amounts every year and make your most fixed rates will allow you to overpay by 10%. So if you wanted to get it down, then maybe in the future, you could take the odd 10% out here and there to get it down quicker if that's what you wanted to. So you would have the balance of, you know, the bulk of your money in the ISAs, getting

• 52:57Speaker 07

  the 4%, and maybe some people like to overpay their mortgage and like to get it down, and that would give you the best of both worlds.

• 53:03Martin Lewis?

  Yeah, and that gives you the flexibility. Once you've overpaid the mortgage, it's much more difficult to get the money back. So it works that way. The only, the one other note, if you are overpaying your mortgage, which can be an incredibly lucrative thing for many people to do. Is make sure that it is reducing the capital that you owe. What many mortgage lenders do is when you overpay your mortgage, they reduce, just reduce your repayments in the future and they keep the term the same length. If you're overpaying your mortgage to really have the savings, you want them to reduce, effectively reduce the length that you'll be paying in future. So you keep your future mortgage repayments at the same level, but it's actually the amount that you owe them that's reducing when you overpay.

• 53:40Martin Lewis?

  Now, we're about to move on somewhere in the podcast that I wasn't expecting to do, which is to talk about mortgage acceptance and how you get accepted. And it's really interesting that many people focus on their credit score, but that's not the most important thing. There are a couple of bigger things that could kibosh your application before we even get to credit scoring. Back to the pod.

• 54:02Martin Lewis?

  Our next question is from Mel. She says, hi, I've lost my job. Sorry to hear that, Mel. Our fixed rate product ends next year on her mortgage, but I expect I'll be on a lower salary. If we stay with the same lender and apply for a consecutive fixed rate product, can we avoid the affordability process? I expect we would fail. Is our home at risk? So actually, I would always suggest to people that when you're looking at a new mortgage, you look at the product transfers. Product transfers is where you're getting a new mortgage deal without changing your lender first, because that's the benchmark that others have to beat. Because it's easier to stick with your existing company than it is to switch elsewhere. So you should always be looking at a product transfer first, just so you know what they need to beat in order for it to be worthwhile till you go elsewhere. Jane, talk us through the affordability question here.

• 54:47Speaker 07

  Okay, so as Martin says, if you go to your existing lender, they will release their, what we call follow-on rates. So which rates they're prepared to offer you at the end of your term, between three and six months before your current fixed rate expires. During COVID, it was six months, but now many lenders have reduced it down to three. So you need to keep an eye on your lender and find out when they will release their follow-on rates to you. If you decide to remain with them, then 99.9% of the time, as long as you make no material change to the mortgage, so you don't change the term, you don't change the type of repayment, Don't turn to the loan amount, then you can normally switch to a new rate without any documentation.

• 55:31Speaker 07

  So that would not be a problem, the fact that you've lost your job. However, if you are struggling, then as I said earlier, it is imperative that you speak to your lender as soon as possible. We have the mortgage charter in place. They can help you to try and get you through what might just be a short temporary blip in life as we all get them. But please don't stick your head in the sand and pretend it's going to go away because it, you know, it probably won't. But absolutely, check with your own lender first. As you, from what you say, you wouldn't be able to switch to an alternative lender anyway. And most of the high street banks lenders follow on rates are pretty competitive.

• 56:11Martin Lewis?

  It's interesting that you mentioned the mortgage charter because you'll probably know it was me who pushed Jeremy Hunt to put the mortgage charter in place. And I sat in a quite a vicious meeting with the bosses of the big banks. And I was the only person on the country that was, all the bosses of the big banks, the chancellor, the head of the regulator and me. And I was the only person on the consumer side. I had asked if I could take mortgage brokers and charities in with me. I got a no. Did the mortgage charter work? It was meant to give people rights if they were struggling on the mortgage. Did it, was it, what did you think of it? Be honest.

• 56:42Speaker 07

  Well, there was certain, under the FCA regulation, we had what was called forbearance. Where lenders said that they would, you know, take a view on people that were struggling. But I don't think it was compulsory. I think what you did was made it compulsory. And for a lot of people, it gave them a breathing space to get their lives back in order. Fortunately, they've decided to continue it, which is great news because people are still suffering from the after effects of Covid. You know, people in hospitality, you know, where jobs aren't very secure still. So I think it's been.

• 57:14Martin Lewis?

  And all the excluded people who never got the help that, you know, catastrophize their finances too.

• 57:18Speaker 07

  Absolutely. So I think it's great that it's still in place. I think it was a bit bad of the lenders not to have done it as a, as a right rather than a, rather than a privilege. Though I think they should have done it anyway. So I think it's great that you managed to shoehorn them into doing it. For people that do suffer life changing events, even if they're only temporary, then I think it's been a great thing. But what I would say is that if you are taking out a mortgage or even if you're renting. Don't necessarily rely on it because there is insurance out there that could protect you from things like sickness and stuff like that. So that if you do have to take advantage of the mortgage charter, then you've got that backup cover in place should it go on and on. Because lenders aren't obliged to do it forever.

• 58:01Speaker 07

  It's a short term assistance rather than a long term fix.

• 58:05Martin Lewis?

  And I think it's just, Worth, I might just talk for a second about acceptance for a mortgage. I mean, the three key things are, first of all, your affordability score, which is the first thing that you'll fall down on. People often talk about credit scores. Mortgages especially, affordability scores are more important. Lenders carry out strict checks to see if you can afford mortgage repayments on top of other expenses. And they stress test how you would cope if interest rates went up. They're usually stressing it above their standard variable rate, 7.5%, even if you're applying for a lower mortgage. So that's part of their, this is new lenders, when you're applying for a deal from a new lender, either a first time mortgage or a remortgage. So that affordability check is crucial. Now, the difference between affordability checks on mortgages compared to credit cards

• 58:50Martin Lewis?

  and loans is when you're applying for a credit card and loan, the affordability check tends to be a statistical one. It says, how much disposable income would somebody in, typically in your position where you live have. So they wouldn't look at your bank statements, they'd just do it on the statistical modelling. So you can't really affect it. But in mortgages, they do often involve going through your bank statements in the run up to your mortgage application. So you can help yourself by going frugal and reducing your outgoings in the three to six months before your mortgage application, if acceptance looks likely to be a problem. It's also worth going £100 beyond an LTV zone. So you know, LTV thresholds tend to get cheaper every 5%. Go £100 beyond that because that can need underwriting too. The good news on affordability.

• 59:36Martin Lewis?

  Is the regulator has reminded lenders recently they have some flexibility and Santander, Halifax, HSBC and NatWest have loosened affordability testing since March, so reducing the stress testing. So you may be able to borrow more 10 to 40,000 pounds more if that's suitable. Jane, anything from you on affordability?

• 59:53Speaker 07

  So what we do have now, I'm sure you're aware, is we now have lenders who are lending for very, very long periods of time, so 10, 15, 20, 25 years and so forth. And one of the reasons for their popularity is that they do not have a standard variable rate. Therefore, they do not stress test on that standard variable rate because it doesn't exist. And so we now have lenders who are willing to lend up to six or seven times income. I'm not saying you should, but I'm saying that those lenders, that is one of their USPs for lending over longer periods of time. And they're also including some fairly flexible features as well. So they may be worth looking at if you're prepared to tie in for a considerable amount of time.

• 1:00:34Martin Lewis?

  And Jane hasn't said this, so it's worthwhile me saying this. If you're struggling with affordability, you're struggling with your mortgage or your credit score, or as I'm about to come on to in a moment, whether your property is right. That's when mortgage brokers are really, really good. I mean, they're very good at helping people understand the process when they don't know and finding them a mortgage. But the important thing to understand is brokers have information about acceptance criteria that is not available to the general public. So a broker can match you to the mortgage that is going to accept you at the cheapest rate. So if you're unsure, don't trust the lender, you're better to go through a broker. And that should hopefully make the process a little bit more simple. But she can't and shouldn't say that, so I will say it.

• 1:01:19Martin Lewis?

  After that, the next most important thing that can stop you getting a house, which isn't often talked about, and this is mainly for people buying a new property, well, it's only for people buying a new property, is the property itself. Right, people often forget that. So, living above a shop. Jane, what else, what other properties don't lenders like that it's worth being aware of?

• 1:01:38Speaker 07

  Where to start, Martin? They don't like studios unless they're 35 metres square or more, or they're in a prime location. They don't like local authority flats in blocks where the majority of the flats are still with social tenants. They don't like local authority blocks where the entrance is from an outside balcony rather from an inside staircase. They don't particularly like concrete. They don't particularly like timber clad. They're above a shop, near a petrol station. Some of them don't like thatched roofs. Yeah, pretty much. There's quite a wide range of properties. And then there are some lenders who specialises in this sort of thing, and they've made it their niche

• 1:02:22Speaker 07

  to lend on unusual properties, but you'd probably need a bigger deposit. So instead of a 5 or 10%, they may want 15 to 20% deposit on the more unusual properties.

• 1:02:32Martin Lewis?

  Right. So, we've done the first two things. Number one, affordability. You can't afford it, they won't lend you. Number two, your property's got to be right, or that can make borrowing quite difficult too. The final one is your credit score. Now, credit score matters. If you've got a really poor credit history, it can torpedo a mortgage application. But if your credit score is okay, and you've flown through the affordability score and you've got the right house, then Jane, you'll probably still be able to get a decent mortgage, won't you? Credit score isn't the first thing, it's probably the last thing of those three.

• 1:03:00Speaker 07

  Well, can I just advise anybody looking to buy a property in the short term to please, please, please avoid Klarna and any sort of short term payment plans?

• 1:03:10Martin Lewis?

  Buy now, pay later, yeah.

• 1:03:12Speaker 07

  They sound great. Lenders absolutely hate them. We also need, if you're running your offices gambling betting account on your personal bank account, please stop. Because lenders don't like that either.

• 1:03:26Martin Lewis?

  And they don't like cash withdrawals on credit cards either.

• 1:03:29Speaker 07

  No, they hate those as well. And believe you me, these days lenders are forensic in their examination of bank account, bank statements, mainly due to money laundering regulations. They go through bank statements with a fine tooth comb. I know there's a lot of people out there that put weird names under their transactions. Some of them you couldn't possibly say on a radio programme, but some of them, but lenders do not like those either. So I think you need a minimum of three months clean, tidy bank statements and no, at least three months of no payday loans or buy now, pay later deals.

• 1:04:04Martin Lewis?

  And also, just as a, don't switch a bank account in the three month run up to applying for a mortgage. Don't do unnecessary credit applications. They won't kibosh it, but they can make things a little bit more difficult. So all of that is really important.

• 1:04:16Speaker 07

  Oh, can I just mention that? Can you make sure that your name is spelt correctly on your credit file? Your address, if you live at 1A, the High Street, and your credit file says the Garden Flat, it's going to come back as a decline on a credit check because they cannot find the data. So make sure that your address matches what's on the Royal Mail website.

• 1:04:35Martin Lewis?

  Well, actually go to the three credit reference agencies, Experian, Equifax and TransUnion, before you even start all this and check line by line through your credit file for errors.

• 1:04:46Speaker 07

  Yeah.

• 1:04:46Martin Lewis?

  That's way more important than checking your credit score.

• 1:04:48Speaker 07

  Yeah. One of the biggest reasons why, especially people that don't go through advisers and go direct is they, they let, they go to the bank, the bank says no, they don't know why. And sometimes it can be just a simple thing as an address mismatch on a credit file. Can I just also say that if you are sitting at your computer on a Saturday night deciding that you're going to go direct, please do not get three, four, five hard searches done on your credit file in an evening. And people do, all in a short space of time, because if none of those mortgages-

• 1:05:17Martin Lewis?

  So in other words, that means you're applying, you're applying for different mortgages at the same time.

• 1:05:20Speaker 07

  Yeah, you get, yeah.

• 1:05:21Martin Lewis?

  Spraying out applications.

• 1:05:23Speaker 07

  Yep. Because by the time you find the one you want, the chances are the lender will, will be very concerned about potential mortgage fraud and the chances are that you'll get declined. And I've spent many an hour on the phone talking to lenders, trying to convince them that it was just somebody had had too many glasses of wine on a Saturday and thought they'd get a mortgage.

• 1:05:40Martin Lewis?

  Jane, thank you so much. That's been really interesting and I especially enjoyed our discussion about acceptance, which wasn't something I was planning to talk about at the beginning, but I think will be really useful for people. Thank you. Thank you so much for joining us.

• 1:05:51Speaker 07

  It's a pleasure. Thanks for having me on.

• 1:05:56Martin Lewis?

  Now, let's move on to a final few of your savings questions. Podcast producer Simon PPS is here. Simon, what have people been sending in on savings?

• 1:06:05Speaker 00

  Yeah, we've got quite a few texts on this during the show. Alan in Slough wants to know, when I transfer a cash ISA from last year, am I allowed to transfer the whole amount, including interest accrued, as well as adding the new 20k allowance for the new tax year if I have that much available?

• 1:06:21Martin Lewis?

  Yes, is the answer, but let me explain in a little bit more detail. The rules for the limiting the amount in cash ISAs is about the amount of new money you can put in. So, you're allowed to put in up to £20,000 per tax year. There are no rules on how much interest you can earn. Any interest you earn stays in a cash ISA. There are no rules on how much you can transfer. If you're transferring a cash ISA, there's no limit on that. It does, there's no annual limit. It just doesn't matter. So, yes, if you have money in a cash ISA, some of which you put in in previous years or this year, and some of which is interest, it can all be transferred over across to a new cash ISA, provided that amount

• 1:07:02Martin Lewis?

  is under that individual product provider's maximum amount. So, as I talked about in fixed rate cash ISAs, some of them only allow you to put a maximum of £20,000 in. So, you could transfer money in, but if you had £40,000 from past years, they wouldn't let you do it because they're only letting you put up to 20 grand in. But that's about a provider rule, not a cash ISA rule.

• 1:07:23Speaker 00

  Another text we got is someone asking about their 19-year-old daughter. She has a Kahoot fixed rate from last year with about £3,000 in, but this fixed rate has dropped to 1%. She saves approximately £50 a month through standing order at the moment, though wants to increase this with her new wages during a gap year. What would be the best fit for her, given she's savings go to uni September 26?

• 1:07:45Martin Lewis?

  So, I presume in that case, she's going to need it to be easy access. The money in Santander, it was a great fixed rate. It's, once fixed rates ends, they tend to move it into a pants account, paying a pants rate. You always need to diarise when the fix ends and you generally need to be either taking any maturity option that they give you. So, sometimes when your fix ends, they will say to you, hey, you can have another fixed rate and here are the ones we're offering you. And they may be even better rates than their new customer rates. So, it's always worth looking at that. Or you just want to get it out of there and move it into the top paying account that you can find elsewhere. I mentioned some of them earlier. You've got cash ISAs which she could use as she's at the right age, even though there won't be a tax benefit. Easy access cash ISAs currently 5.07% from trading 212, which includes a year-long

• 1:08:25Martin Lewis?

  0.72% newbies bonus. Plum is 5.06%, but more of that is a newbie bonus for a year, 1.52%. Moneybox 5.05%. Top bigger name would be Marcus Bank, which is owned by Goldman Sachs at 4.3%. Some of that's a bonus too. The bonus doesn't really matter that much. It just means you're probably going to have to move it in a year as the rate will drop, but it's worth doing and you can always move a cash ISA. So I would probably be looking at any of those. I mean, the truth is, just try and get yourself something over 4%. And there are loads of accounts over 4%. The higher up you go, the better. Where if you put it in a cash ISA, it protects from tax and the cash ISA easy access rates are better at the moment. Yeah, but don't keep it in an account paying 1%. That's just pants. You need to just move it. And moving a normal savings account is easy peasy lemon squeezy.

• 1:09:10Martin Lewis?

  You literally just open the new savings account, withdraw it from your existing savings account, put it in the new savings account. There's no transferring. There's no anything that you need to do there. Next question. Of course, you could also consider a lifetime ISA if she would be saving it towards a first time home. If you listen back to the bit I talked about that on earlier.

• 1:09:25Speaker 00

  Did you mean to say Santander?

• 1:09:28Martin Lewis?

  Because, because she said Kahoot, didn't she?

• 1:09:29Speaker 00

  Yeah.

• 1:09:30Martin Lewis?

  Sorry, Kahoot is a sub-brand of Santander. I'm talking about the same things and actually offered very similar savings account through Kahoot and Santander. So yeah, in that sort of sense, they're interchangeable in the question and my mind was just going to the bigger bank. But thank you for pointing it out.

• 1:09:43Speaker 00

  Oh, we got sent this one from Gerry. My son is looking to buy this year and has a help to buy ISA. However, he is likely to purchase a home over 250,000. He will not, therefore he will not get the government bonus.

• 1:09:55Martin Lewis?

  Correct.

• 1:09:55Speaker 00

  Can he transfer funds to a lifetime ISA? Does the money have to be in the ISA for a year to get the bonus?

• 1:10:03Martin Lewis?

  So the Help to Buy ISA is the predecessor to the Lifetime ISA and you're right, outside of London, you have to be buying a property that costs less than £250,000 and I don't see that increasing in any time in the future. Inside London, it's up to £450,000. The Lifetime ISA, the limit is a property £450,000 anywhere across the country. So if you're buying a property of £350,000, then yes, you would be better in a Lifetime ISA. But you have to have the Lifetime ISA open a year to get the bonus as a first time buyer. Your question says, does he have to have the money in for a year? No, the Lifetime ISA has to have been opened. So if he already has a Lifetime ISA opened, even with just a quid, hence why I suggest

• 1:10:47Martin Lewis?

  the quid thing for everybody, then he can put the money in and as long as it's been open a year by the time he uses it, open, not about when he puts the money in, about the time the ISA was opened, then he will be able to get the bonus. But if he hasn't got a Lifetime ISA opened at the moment, then putting money into a Lifetime ISA, if he's planning to buy in four months' time, is pretty pointless because he'd have to pay a withdrawal penalty to get the money out. The advantage of the Help to Buy ISA over the Lifetime ISA is while he won't get the bonus, he won't pay a penalty to withdraw his money. So here's what I would probably do. If you've got a Lifetime ISA and it's been open so that it'll be over a year, then yes, move the money from the Help to Buy ISA into the Lifetime ISA and you can transfer it

• 1:11:30Martin Lewis?

  or you could just withdraw it and put it in because it sounds like you've got less than the lifetime ISA, yearly Lifetime ISA amount. If he hasn't got a Lifetime ISA, I probably wouldn't do that. I'd keep it in the Help to Buy ISA for now, but I would put a pound in a new Lifetime ISA just in case he didn't buy the property and that Lifetime ISA was then going to be open in a year when he does buy the property and I'd at least get that clock ticking because again, you're only risking 6.25 pence and it's worth it just in case something happened that meant he didn't buy the house now.

• 1:12:00Speaker 00

  And the final text that we got sent in, they didn't include the name, but I've set up a couple of junior ISAs for my two daughters with 5,000 in each at 3.5% interest. Is there a better junior ISA to put the money in?

• 1:12:12Martin Lewis?

  Yeah, the top paying junior cash ISA is Coventry Building Society at 4.25%. Again, that's probably likely to come down by a quarter of a percent now. And you can transfer in other junior ISAs and child trust funds into there. You can do it by postal branch. If you want one online, then it's actually the UK owned financial services provider, NSNI, National Savings as it used to be called, which is paying 4% and that allows you to transfer stuff in too. And that, I think, is the end of our savings and loans section.

• 1:12:44Martin Lewis?

  And let's just finish with the final couple of tellers. Things that you can buy abroad for far cheaper than you can buy at home, but you've got to be able to transport them here too. We'll just do a couple of tech ones to finish. I've got one from Jennifer, who says, "I'm Canadian." That was the worst Canadian accent. That was just not a Canadian accent at all. I went Australian. I'm so sorry. I'm not going to do an accent. "I am Canadian and visit home annually-ish. I usually buy my mobile..." I don't know why I'm doing this. I'm keeping up though because I'm just, you know, I'm just styling it out. "I usually buy my mobile phones and laptops there. I buy more things, but TVs are too large to bring back. Ha ha. Unsure if that fact will remain with the tariffs. Depends on how brands are imported, I suppose." So yeah, mobile phones and laptop tech in Canada. I think you've got one about the US as well, haven't you?

• 1:13:29Speaker 00

  Yeah, we've got one about Apple products.

• 1:13:31Martin Lewis?

  I'm sorry, Jennifer, for the silly accent. I don't know what happened.

• 1:13:33Speaker 00

  But it's good to future-proof yourself. If the BBC go back down a kind of RP route for presenters, then you'll still be okay.

• 1:13:39Martin Lewis?

  Quite right.

• 1:13:41Speaker 00

  We got sent this anonymous one. "Apple products are consistently and significantly cheaper in the US and Canada every time I go. Current price for an iPad Pro 13 inch in Canadian dollars is 1,799, which they say is 931 pounds with Monzo's near-perfect rate."

• 1:13:58Martin Lewis?

  Sounds about right.

• 1:13:59Speaker 00

  In the UK, that would cost 1,299 pounds, so 368 pounds saving, which is 28%.

• 1:14:06Martin Lewis?

  Yeah, I mean, that is a big difference and can almost be worth the price of going if you're going to buy, couldn't it, in that sense? Which I think, well, I'll do one more. Let's do Ria. Random. "Just been to Lanzarote and really decent hairbrushes in the supermarket were around 2 euros. Usually at least 10 quid here. So we didn't want to brush that one under the carpet or brush that one with your hair." And that seems a good way to end. Thanks for listening, everyone.

• 1:14:31Martin Lewis?

  That's it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast and suggest they do the same. We tend to put out a new episode every Thursday. Subscribe to keep up to date, then your pockets will be pleased with you. And if you've not enjoyed it...

• 1:15:04Speaker 08

  Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected]. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

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