How to take on the mortgage timebomb - and win
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Your support makes all the difference.Homeowners who took out fixed rate deals at very attractive rates two years ago could be in for a shock.
Homeowners who took out fixed rate deals at very attractive rates two years ago could be in for a shock.
Almost 350,000 took advantage of interest rates which had sunk to their lowest level for almost 50 years to get on the property ladder, but five hikes since November 2003 means the good times have ended.
According to figures compiled by the Mortgage Advice Bureau, the interest rate on a typical £100,000 repayment loan has risen from an average fixed rate of 4.23 per cent to 6.75 per cent standard variable rate. This means the monthly repayments will have increased from £547 to £699.
James Cotton, mortgage specialist at London & Country, says: "It is very important that people start shopping around early because re-mortgaging can take at least eight weeks to organise."
Public relations executive Jo Barker has already switched her mortgage and estimates she will save hundreds of pounds this year - even after paying a redemption penalty for an early escape from her current agreement. The 33-year-old has been paying £680-a-month since taking out a two-year fixed rate of just 3.69 per cent with the West Bromwich Building Society to buy her £160,000 one-bedroom flat in London.
But after being told she would be charged the standard variable rate of 6.79 per cent, she decided to look elsewhere.
Broker London & Country found her an attractive fixed rate with the Coventry Building Society, capped at only 4.99 per cent.
"There are so many options out there that it's well worth shopping around for a better deal as soon as your existing mortgage comes to an end," she says.
"If I'd have gone onto the standard variable rate my monthly repayments would have gone up by £250, but they have only increased by £100 instead."
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