Should I Be Shopping For Fixed Mortgages Right Now?
One of the biggest mistakes mortgage borrowers make is complacency - by making assumptions or putting things off you might find you are not saving as much as you might do if you took a more proactive approach. To just say that all SVRs are cheaper than fixed mortgages is foolhardy and to automatically think that you would not be able to benefit from new fixed mortgages over the long term is more foolhardy still.
Recent figures* show that SVR mortgage deals are now charging on average, 4.7%, a reduction of just 0.98% over 12 months. Many people are living with the assumption that they couldn't possibly do better than their SVR deal, maybe because they have been told so by their lender - but one quick check of the latest fixed mortgages on the market and they might be surprised to find that they are missing out on some great loan deals.
What many mortgage borrowers don't understand is that lenders are free to price their SVR as they please, and therefore an SVR deal might not be the best way to get the most benefit from the low base rate environment, and in fact they may find that fixed mortgages might be a better bet. Most lenders use the Bank of England base rate as a start point and will then calculate their lender base rate on what it costs for them to access money on the markets - if the lender can't find cheap credit, as is often the case right now, their SVR might not be much cheaper than some of the more competitive fixed mortgages out there.
For those who have built up at least 20% equity in their home the fixed mortgages market is booming - the 'super prime' borrower market is the most competitive mortgage space out there and lenders are fighting to get good quality borrowers on their mortgage books. So if you have a good loan to value ratio on your property and a clean credit history, there is a good chance you will be able to find some great fixed mortgages out there.
So talk to a mortgage adviser about your situation. It might be the case that you cannot get better rates on fixed mortgages than you currently have with your lender's SVR. But then again this might not be the case - and the only way you can find out is by asking a mortgage professional who knows the UK mortgage market and knows whether fixed mortgages are the best deal for you.
* Moneysupermarket.com, 23/11/09
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