2033 – A mortgage odyssey

If Alistair Darling gets his way 2033 would be the year mortgage borrowers would have their home loan interest repayments fixed to, as part of his plan to provide affordable 25 year mortgages.

Fixing well into the future

If these plans were implemented home buyers would be encouraged to agree an interest rate with their lender for 25 years. While this would provide security for borrowers wanting to know exactly what they need to repay for the next 300 months it could lead to thousands of us missing out on lower interest rates. At present, just seven out of the 90 mortgage lenders offer these deal and the average interest rate on them currently comes in at 5.92% but with interest rates in 2003 falling as low as 3.5% it could be foolish to sign up to such a long term deal.

Rock the boat

An estimated 340,000 people are coming to the end of cheap fixed rate deals this year, including thousands of Northern Rock customers looking to move onto a new mortgage deal. If you’re in this position then it’s important to consider what sort of deal you’re willing to sign up to and to find out what your current lender is prepared to offer you.

Pastures new

If the deal you’re being offered isn’t up to scratch then perhaps it time to consider a different lender, but when it comes to choosing a new lender few of us venture beyond the big high street names and we could be missing out as a result.

On 3 year fixed rate deal for a £150,000 mortgage The Derbyshire comes out amongst the best buys as does Skipton Building Society, Stroud and Swindon and First Active.

On the same tracker deal Furness, Monmouthshire and Chorley Building Societies hit the top three spots.

Arrangement fee

A further factor to consider when taking out a new mortgage is the level of fee you are likely to be charged for setting it up. The Furness tracker for example comes without a set up fee, while the Monmouthshire Building Society charges £124 and Chorley £1,172. Amongst the high street lenders fees now average around £1,000 so if you manage to pay less than this you’re doing well.

Tie down the best deal

A mortgage can be a big financial strain and the Citizen’s Advice Bureau has recently reported a 35% rise in mortgage debt related enquiries proving that many of us are up against it financially.

If you’re looking to remortgage, then consider just how long you are willing to tie yourself to an interest rate and think beyond the big name lenders.

Be sure to take into account the fees you might be charged for setting up your mortgage and remember that a one per cent difference on the average mortgage could cost you as much as £4,000 over five years so go in search of the best rate possible!

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