Feeling the crunch – why do we seem so poor?
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1. Switch your mortgage
If you’re paying your mortgage lender’s standard variable rate (SVR), you should be able to get a better deal by switching to another lender.
Most lenders’ SVR is higher than the Bank of England’s (BoE) base interest rate – currently 5.25% – which is what lenders set their mortgage interest rates by.
MoneyExpert found that 1.4 million people have moved to a new mortgage deal over the last six months. Its study revealed that 11% of all mortgage-holders have moved to a different lender since June 2007.
There are a number of options, including fixed-rate mortgages, where you pay the same rate of interest for a fixed period (usually two to five years), and variable-rate mortgages, which rise or fall depending on what happens with interest rates.
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How far will rates fall?
It should be noted that many experts are predicting the BoE to drop interest rates further over the coming year – perhaps as far as 4% – so now may not be the time to lock yourself in to a fixed rate.
Switching your mortgage can be a straightforward process – just speak to a mortgage adviser or independent financial adviser, and they’ll look for a deal based on your particular financial circumstances.
Just make sure you take into account the various fees you might pay, including arrangement and booking fees, when deciding which is the cheapest deal.
