Personal Finance News
What our customers say..."Its very useful to me"
Mortgage rates at lowest for 2 years - but for how much longer?
The interest rates on new mortgage deals have been gradually falling over the last couple years, with some very attractive fixed rates, the lowest we’ve seen for a long time, now available.
However,
with all the current uncertainty surrounding the knock on effect of public sector budget cuts and higher than expected inflation, experts are divided as to when interest rates will start to increase, with some predicting rate rises as early as the first half of 2011.
with all the current uncertainty surrounding the knock on effect of public sector budget cuts and higher than expected inflation, experts are divided as to when interest rates will start to increase, with some predicting rate rises as early as the first half of 2011.
Whilst people looking for a 90% loan to value (LTV) mortgage won’t find as many low cost deals available the choice even in this sector is still far better than it has been for some considerable time, if on the other hand, you have a 25% or more deposit, then recent competition has forced mortgage interest rates much lower.
Check out the latest options for your own mortgage balance and term here and see how much you could save by remortgaging.
Many people will be coming off their existing fixed or discounted rate mortgage in the next few months and will need to make a decision as to what to do next.
The standard variable rate (SVR) that your lender will put you on when your current deal expires will, in some cases,
still turn out to be a reasonable rate when compared to the fixed rate you opted for two or three years ago. However, you may not feel comfortable with your mortgage on this variable interest rate, particularly if rates start to increase in the next 12 months. The alternative is to look for a new fixed rate, where at least you will have the peace of mind of knowing what your repayments will be each month.
still turn out to be a reasonable rate when compared to the fixed rate you opted for two or three years ago. However, you may not feel comfortable with your mortgage on this variable interest rate, particularly if rates start to increase in the next 12 months. The alternative is to look for a new fixed rate, where at least you will have the peace of mind of knowing what your repayments will be each month.
|
But it’s not just the interest rate to take into account when looking for a new home loan; you will also have to consider the costs associated with switching your mortgage. One advantage of doing nothing and staying put on your lender's SVR is that you don’t have to pay a penny, plus you are not tied in with any early repayment charges.
If you remortgage to a new fixed or tracker rate with another lender you will need to factor in to your calculations the need to pay your new lender’s mortgage arrangement fee, which could cost you anything from just £99 to £999 or more, depending on the particular deal you move to.
However for some people, rates have fallen by such an extent that if you have a reasonable amount of equity in your property, and depending on the size and term of your loan, it could even be worth exiting your current deal before the maturity date.
Although the size of the early redemption charges payable in some cases may make the prospect of switching a non starter, for others it may make financial sense to pay the penalty on your existing fixed rate mortgage and to take advantage of one of the new lower rate deals.
Here’s a taste of some of the best buy fixed rate mortgages available at the moment:
·
Yorkshire Building Society 2 Year fixed at 2.89% plus fee £495 (Maximum 75% LTV) ·
First Direct 5 Year fixed 3.89% plus fee £99 (Max 65% LTV) ·
Post Office 5 Year fixed 5.79% plus £995 fee (Max 90% 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, make a note in your diary to check on moneynet.co.uk in a couple of months time as rates are changing almost daily and there may soon come a point when it does makes sense for you to switch your mortgage.
|
Published: 07/12/2010
The information in this article was correct at the time of publication and contains time sensitive data and links, it may not be accurate at the time of reading.