Fixed-rate fallout

Financial Services News

28 March, 2008

In 2003 around 340,000 borrowers took out 5 year fixed-rate mortgages. It is estimated that they will face a combined bill increase of over one billion pounds this year.

Peter Toner, Independent Financial Adviser with Forbes Solicitors says. 'Traditionally around a third of borrowers either stick with their existing lender or move simply because of a word of mouth recommendation. Some borrowers face increases of up to a third in their mortgage payments. This is borne out by figures from the Citizens Advice which has recorded a 35% jump in enquiries concerning mortgage arrears in the first two months of 2008.

Consumers need to make full use of all the resources available to them. Firstly, they need to seek advice from their existing lender as to what deals they can offer. To simply move onto their variable rate would involve a massive monthly payment hike. Secondly they need to take Independent Financial Advice to ensure that this huge investment is managed intelligently.

Homeowners need to be aware of two common pitfalls. If arrangement fees are added to the loan then interest is payable on that figure throughout the loan period. Secondly they should be aware that by increasing the mortgage term greatly to reduce monthly costs the cost per pound borrowed would also increase'.

For further information please contact Peter Toner or Annette Heyes in the Financial Services Team at Forbes Solicitors on 01772 220022

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