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Your Money > Mortgages Articles > Pre Christmas mortgage...
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By Emma Tyrrell Christmas is a-coming, and the goose is being checked for signs of bird flu. Santa may not be descending down your chimney for another two months, but shops and restaurants around the country are already putting up their decorations and dusting off their But while the early arrival of the pre-Christmas marketing blitz might be an annoyance to many shoppers, it provides a useful reminder to those in the know that this is the time of year to search for bargains – mortgage bargains that is. Mortgage lenders have annual sales targets which tend to run to the end of the calendar year. As a result, the run up to Christmas is generally a great time to find a good Surveys are showing that we Brits are planning to tighten our belts when it comes to this year's Christmas spending, with findings from Morgan Stanley last week showing that we plan to cut our festive credit card splurge by 10 per cent. So, if you're planning to spend a little more wisely, it makes sense to try and save money elsewhere too, by remortgaging if you can. If you cut your regular monthly outgoings, the January pain when the Christmas credit card bills land on your doorstep might be more easily salved. You'll need to act soon if you're after a fixed rate mortgage deal, however. Although lenders are still pricing their offers competitively, the swap rates which they base their fixed rate pricing on are about 0.3 per cent higher than a month ago. Ray Boulger, of mortgage broker John Charcol, says the rise in the swap rate is a result of the city becoming less confident that the Bank of England base rate will be cut in the short-term. It currently stands at 4.5 per cent. "We have seen a number of lenders pull their fixed rates over the past week and this looks set to continue," says Boulger. "Borrowers either need to move quickly to secure some of the remaining market-leading deals, or be prepared to wait until the New Year when rates may fall back." Among the remaining keenly priced fixed rate deals at the moment are two deals from Halifax and Skipton Building Society. Both are offering a 4.29 per cent two year fix, with a free valuation and free legal work for remortgagers. Both allow you to overpay up to 10 per cent of the loan each year without penalty, and neither has any penalties or tie-ins for switching or paying off the mortgage once the initial fixed rate period is over. The Skipton's deal, only available direct, slightly has the edge, with a £449 arrangement fee - £150 less than that charged by the Halifax . Someone currently paying a standard variable mortgage rate of 6.5 per cent on a 25 year homeloan of £150,000 would be shelling out £1,012.81 a month, according to London & Country. If they switched to the Skipton deal they could save nearly £200 a month, with a new repayment figure of £815.97. A few months of savings like that would pay for a Christmas presie or two. Cheaper still for those with large mortgages is a 3.89 per cent two year fix from BM Solutions. This has a whopping £1,499 arrangement fee, and you have to pay for a valuation and legal fees, which together would probably cost another £650. As such, most borrowers will find it less attractive than deals with less attractive headline rates. Bigger borrowers however, may still want to take a look. Compared to the Skipton deal, you've got another £1,650 odd of fees to pay or add to the mortgage, which means anyone borrowing less than around £212,500 will probably be better off with the Skipton, while those borrowing more could consider the BM Solutions deal. The two year fixes tend to have sharper rates, but if you yearn for a little more security, there are also some good five year fixes around. Britannia is offering a 4.39 per cent five year fix, with a £449 fee and no freebies, or a 4.54 per cent fix with a £349 arrangement fee and free legal fees and valuation. For those prepared to sacrifice security in the hope of benefiting from future cuts in the Bank of England base rate, there are also some decent tracker and discount rates around. Abbey is offering a 2 year loan which tracks 0.26 per cent below the BoE base rate (currently 4.5 per cent) for two years. However it has a heavy £699 arrangement fee, no fee legal or valuation fee for remortgagers, and is only available to those borrowing 60 per cent of their property value or less. Britannia also has a two year tracker mortgage which tracks the base rate, has fee valuation, free legal fees, a £349 arrangement fee and no early repayment charges at any time, meaning you could remortgage penalty-free after just a few months if a more attractive deal comes along. Before you remortgage, check that there are no penalties from your existing lender for doing so. Most new mortgage deals only tie you in for the period of the special fixed, tracker or discount rate, but older ones may have extended tie-ins. If you're still hesitating about moving from a current expensive mortgage rate to a cheaper deal, you can be assured that remortgaging is one of the more hassle-free types of financial account switching. Last time my husband and I remortgaged, the lender didn't even want to get a new valuation, as it was happy to rely on the one carried out a couple of years earlier by another mortgage firm. We just signed a few forms, sent off some ID, and waited a couple of months for the deals to switch over. Certainly a lot less hassle than Christmas shopping. |
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