Newspaper article The Evening Standard (London, England)

Take the New Mortgage Plunge; This Is Money

Newspaper article The Evening Standard (London, England)

Take the New Mortgage Plunge; This Is Money

Article excerpt


WHEN you get home tonight, dig out your mortgage documents and check the rate you are paying.

There is an extremely good chance you can save a packet by becoming a "rate tart".

This cheeky nomenclature has been coined by the mortgage industry to describe astute homeowners who bounce from one discounted mortgage deal to the next, thus playing the fluctuating interest rates and saving, potentially, hundreds of pounds a month.

The Monetary Policy Committee yesterday played into the hands of the rate tarts by cutting the base lending rate to four per cent, the lowest since 1963.

Several of the big lenders immediately followed this year's seventh rate cut - Abbey National, Halifax, HSBC and Nationwide among them. There are now some excellent deals which will be especially tempting for those on three or four year-old mortgages.

Some lenders are getting wise to rate tarts and are introducing penalties which make remortgaging unviable, so beware. But there are still great deals to be had and brokers are advising homeowners to get stuck in while the rates remain low.

But independent brokers say we shouldn't just be satisfied with this. If you are paying your lender's standard variable rate (SVR), you are almost definitely throwing money away.

"Those stuck on uncompetitive SVRs - over six per cent - have really got to look at what savings they

could make by switching deals," says David Hollingworth, independent broker at London and Country Mortgages. "Even if there is a penalty to get out of your current loan, many discounted and fixed-rate offers are looking so attractive right now it could still pay to move."

"Lenders are already very worried about the growing phenomenon of rate tarts," warns David Bitner at The MarketPlace at Bradford and Bingley.

"As a result many will emphasise the penalties involved in remortgaging when in the majority of cases people will more than make that back in the savings on a lower rate."

Even if you think you already have a good deal, experts are advising borrowers to dig out their mortgage papers and compare them to other offers in the market. …

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