Experts offer suggestions for fixed rate mortgage customers
January 3, 2008
Over recent months concerns have been growing within the housing and mortgage sector over the many homeowners that are due to come off cheap fixed rate mortgage deals in the coming months. Many took out cheap fixed rate loans tow or three years ago when interest rates and fixed rate were much lower. However, when they come off the fixed rate deal, as the term comes to an end, they could be hit with a rise of hundreds of pounds a month in repayments, as their interest rate shoots up to the lender’s standard variable rate.
One industry expert is now urging those that are due to come off cheap fixed rate mortgage deals to take action as early on as possible, stating that this is important “because if you come to the end of a fixed-term and don’t remortgage you will be put on the lender’s standard variable rate which will be northwards of seven per cent.”
According to a report those with a mortgage of £200,000 could see repayments rise by £200 per month once their fixed rate deal comes to an end unless they take early action to ensure that the financial impact is lessened. One mortgage expert has stated that there are a number of solutions available. With interest rates having come down recently homeowner can look around for other competitive fixed rate deals to switch to. Interest rates are likely to fall again early in the new year, which could help.
He also stated that as a short term measure borrowers could look at extending their mortgage term wherever possible, which could impact upon monthly repayments or switch to an interest only mortgage on a temporary basis to keep repayments down.
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