Personal Finance News

The base rate cut we saw last Thursday was the fifth consecutive monthly fall which has seen base rate drop from 5% last October to an all time low of just 1% now.

Whilst this has been devastating news for savers who are now struggling to get a decent return on their money, the news for some mortgage customers is more promising, particularly for those on variable rates or base rate trackers.

So, although lenders have tightened their lending criteria for borrowers with little or no equity there are still plenty of good deals out there for those lucky enough to only need a mortgage of 75% of the property value or less. So, if you're coming to the end of your current deal what should you do?

The first thing to consider is that there is no tearing rush to make that next move. This is because the standard variable rate (SVR) that your lender will put you on when your current deal expires will, in most cases, turn out to be a lot lower than the one you opted for two or three years ago. However, you may not feel comfortable with your mortgage on a variable interest rate and prefer to look for a new fixed rate, where at least you know what your repayments will be each month.

Here are the SVRs currently being charged by some of the biggest lenders:

• Lloyds/C&G 3.00%
• Nationwide BS 3.00%
• HSBC 3.44%
• Halifax 4.00%
• Abbey 4.69%
• Woolwich 4.99%

But it's not just the interest rate to take into account; you will also have to consider the costs associated with switching your mortgage. The advantage of doing nothing and staying put on your lender's SVR is that you don't have to pay a penny, plus you will probably not be tied in with any early repayment charges.

If you do decide to remortgage to a new fixed or tracker rate with another lender you will have to consider the costs involved. For example, you will have to pay an exit fee to leave the existing mortgage, which in some cases may be as much as £200 to £250. In most cases you will then be faced with your new lender's mortgage arrangement fees, which could cost you anything from around £100 to £1,500 or more, depending on the particular deal you move to. In addition to that you will be faced with a mortgage valuation fee and legal costs of several hundred pounds.

However, having said all that, the attractiveness of many of the deals currently available could well mean that moving lender makes sense - even if only for the peace of mind that a fixed rate gives you. But before you make a jump to a new lender don't forget to speak to your existing lender first as they can often offer you a much better deal than the one you're on - you simply have to ask!

Here's a taste of some of the deals available as at 11th February 2009:

• Nat West 2 Year fixed at 3.49% plus fee £799 (Max 75% LTV)
• HSBC 2 Year fixed 2.95% plus fee £799 (Max £250k loan and 60% LTV)
• First Direct tracker 2.89% plus £799 fee (Max 80% LTV)

Whatever decision you decide to make regarding your mortgage, it's important that you weigh up all the facts and the costs and choose a product that is right for you. Don't rush in without doing your homework as it could turn out to be an expensive mistake.

So rather than getting your calculator out and struggling to see if the numbers add up for you, why not let moneynet help you search for the best deal for your circumstances by entering your requirements here with the option to speak to a mortgage adviser if you so choose.

If it's not right for you to move now, don't give up, check again on moneynet.co.uk in a couple of months time as rates are changing pretty frequently and there may soon come a point when it does makes sense for you to switch your mortgage.