THE CRUNCH! YOUR QUESTIONS ANSWERED; ADVERTISEMENT FEATURE; with Low House Prices and Even Lower Interest Rates Causing Confusion in the Housing Market, Lloyds TSB's Financial Health Specialists Address Some of Your Key Concerns about Mortgage Payments and Remortgaging

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This week, Liz Frost, financial health specialist at Lloyds TSB, Folkestone, answers four of the top questions she's being asked about mortgages. Liz is one of 1,500 trained financial health specialists throughout the country at Lloyds TSB branches.

Q Is now a good time to be focusing on chipping away at (overpaying) my mortgage debt?

This can be a good idea, but it depends on your individual circumstances. If you look at paying money towards your mortgage, as opposed to putting it in a savings account, it can seem attractive. For example paying [pounds sterling]100 where the rate is four per cent gives a better return than saving [pounds sterling]100 where the rate is three per cent. Over a year you'll save [pounds sterling]4 in mortgage interest, but you'd only earn [pounds sterling]3 in savings - and that's before any tax is deducted. There are lots of caveats, of course - for example, if you overpay, your lender may impose an early repayment charge. Also, some lenders do not offer any immediate benefit for overpayments, because they do not calculate mortgage interest on a daily basis. Saving is still a good idea, so you've got money behind you if you need it.

Q My current mortgage deal ends later this year and I'm concerned I won't be able to find a good deal to switch to - what is the best type of mortgage in the current climate?

With mortgage rates at low levels, and assuming you have equity in your property and your finances and credit history are in good shape, there's no reason why you can't get a good deal in today's market. The choice you need to make is whether you are happy to stay on the Standard Variable Mortgage Rate (SVMR) or to switch to a new tracker or fixedrate deal. Whether to move to a fixed-rate mortgage or not is always going to be a personal call, and does depend on your longterm plans for the property you have in mind. For example, if you remortgaged to a fixed rate of four per cent when you could have got three per cent variable, then, yes, you will be paying a little more than you would with variable rates. …