Time for some mortgage advice....
Borrowers could see a huge hike in monthly mortgage payments when their fixed rate deal ends...
The 1,400,000 mortgage borrowers whose fixed rate deals will come to an end this year could see their monthly payments increase by nearly £400 if they don't plan ahead and arrange to switch to another mortgage scheme.
Most mortgage deals revert to the lender's standard variable rate (SVR) once the fixed or discounted period is over. This time two year's ago, West Bromwich Building Society had the leading two-year fixed rate, at 4.19%. Someone who had that deal and has a £150,000 interest-only mortgage will see their payments go from £524 a month to £917 when the fixed rate expires at the end of March and they move on to West Brom's SVR of 7.34%.
To avoid paying such a rate, It is crucial to remortgage on to another fixed or discounted product. Unless the borrower is tied into a mortgage deal with extended penalties, there is no need to pay any lender's SVR, as it is the most expensive option by far.
But, be warned - even if you remortgage, you will probably be paying more than you have been in the last 2 years. The Bank of England base rate is currently 5.25%, compared to 4.5% this time two years ago. And, as a result of the credit crunch, many mortgage lenders have been looking to widen their margins. As a result, mortgage rates are significantly higher than they were in 2006.
There are some good deals available though and the Council of Mortgage Lenders said this week that the payment shock for those coming off low fixed rates will not be as severe as many had expected.
As the credit crunch has resulted in many lenders increasing their margins, and now being more cautious about who they will lend to, it has also brought some relief to existing borrowers. The Bank of England's decision to cut interest rates in December and earlier this month stemmed from concerns about the impact of the financial crisis on the economy.
As a result many mortgage rates are lower than they were last summer - in fact if you want long-term security you can even secure a 10-year fixed rate deal at a lower rate than the leading two-year deal that was available six months ago.
As always, you should speak to me, an Independent Mortgage Adviser, to discuss the current possibilities. Call on 08458 386938 during office hours and I'll be happy to start the process for you.
As ever, all the best,
Des
The 1,400,000 mortgage borrowers whose fixed rate deals will come to an end this year could see their monthly payments increase by nearly £400 if they don't plan ahead and arrange to switch to another mortgage scheme.
Most mortgage deals revert to the lender's standard variable rate (SVR) once the fixed or discounted period is over. This time two year's ago, West Bromwich Building Society had the leading two-year fixed rate, at 4.19%. Someone who had that deal and has a £150,000 interest-only mortgage will see their payments go from £524 a month to £917 when the fixed rate expires at the end of March and they move on to West Brom's SVR of 7.34%.
To avoid paying such a rate, It is crucial to remortgage on to another fixed or discounted product. Unless the borrower is tied into a mortgage deal with extended penalties, there is no need to pay any lender's SVR, as it is the most expensive option by far.
But, be warned - even if you remortgage, you will probably be paying more than you have been in the last 2 years. The Bank of England base rate is currently 5.25%, compared to 4.5% this time two years ago. And, as a result of the credit crunch, many mortgage lenders have been looking to widen their margins. As a result, mortgage rates are significantly higher than they were in 2006.
There are some good deals available though and the Council of Mortgage Lenders said this week that the payment shock for those coming off low fixed rates will not be as severe as many had expected.
As the credit crunch has resulted in many lenders increasing their margins, and now being more cautious about who they will lend to, it has also brought some relief to existing borrowers. The Bank of England's decision to cut interest rates in December and earlier this month stemmed from concerns about the impact of the financial crisis on the economy.
As a result many mortgage rates are lower than they were last summer - in fact if you want long-term security you can even secure a 10-year fixed rate deal at a lower rate than the leading two-year deal that was available six months ago.
As always, you should speak to me, an Independent Mortgage Adviser, to discuss the current possibilities. Call on 08458 386938 during office hours and I'll be happy to start the process for you.
As ever, all the best,
Des
posted by Des Tourick 1st Call 4 Mortgages at
22:51
0 Comments:
Post a Comment
Links to this post:
Create a Link
<< Home