If you haven't remortgaged recently, then what are you waiting for? Mortgage rates are at record lows and you could save yourself a small fortune by switching to the best possible rate.
The average fixed mortgage rate is currently 3.43 per cent, according to MoneyFacts.co.uk, but the best deals are far lower at 1.18 per cent. Switch to that low rate and you would save £2,684 over two years if you borrow £100,000.
Usually you need to make a decision between fixed and variable rate mortgages. But at the moment there are fixed rate deals that are cheaper than variable so, as long as you have a good enough loan-to-value (LTV) ratio to snaffle the best deals, you should look at fixed rate options. After all, the base rate is highly unlikely to go down, so there is little benefit to be had with a variable rate mortgage.
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In the fixed rate market there are plenty of good deals out there. The lowest two-year fix is offered by Yorkshire Building Society and has a rate of just 1.18 per cent. To get that you need to have an LTV of 65 per cent - at the most - and there is a fee of £1,499. But don't just go for the lowest interest rate. The banks are savvy about this and will offer a mortgage with a low rate to put them at the top of the comparison tables - but it will come with enormous fees.
Norwich & Peterborough Building Society offers a two-year fix with a higher rate of 1.64 per cent, but the fees are far lower at £345. Given that your fees are added to your mortgage and interest charged on them, they can make a big difference. Over two years you'll pay £639 more for the Yorkshire Building Society mortgage if you borrow £100,000. So the Norwich & Peterborough deal is actually cheaper despite having a higher interest rate.
In contrast the cheapest two-year variable rate is 1.25 per cent from Tesco Bank with a £995 fee. That would cost you more than £200 extra over two years than the best fixed-rate deal - even if mortgage rates don't move. So there really is no reason not to fix.
In fact, you may want to consider fixing for longer. The interest rates on five and ten-year fixes are unbelievably low. Get one of those deals and you could really save money as interest rates are widely predicted to rise in the coming years. You will also save a lot of money as you won't have to pay the costs of remortgaging every couple of years. This could save you thousands of pounds over a decade.
Chelsea Building Society offers the lowest five-year fix with a rate of 2.19 per cent. To get that you will need to have a maximum LTV of 65 per cent and pay an arrangement fee of £1,675.
But, Yorkshire Building Society offers a five-year fix at a rate of 2.24 per cent with a far lower fee of £975. That would work out £552 cheaper than the Chelsea mortgage over five years.
If you are in a position to, you may even want to consider a ten-year fixed rate mortgage. First Direct is top of the table with a rate of just 2.89 per cent fixed for ten years. The maximum LTV is 65 per cent and fees are £950, but you have to have a First Direct current account to be eligible.
Even taking into account fees, the First Direct mortgage is the cheapest ten-year fix, but if you don't want to switch current account provider, Nationwide, Santander and Barclays also offer ten-year fixes at a rate of 2.94 per cent.
A word of warning with long-term fixes though. Make sure you read the small print on early repayment charges and porting. Will you be stung by charges if you want to move house, or can you take the mortgage with you? For example, the First Direct ten-year mortgage can be ported to another property, but if you do decide to leave the deal before the ten years are up you'll face up to a three per cent early repayment charge.
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