Jan 27 2009
Should you fix your mortgage rate?
According to the Guardian, the rates on fixed rate mortgages are coming down - but they still come accompanied by hefty arrangement fees (ranging from £599 to £1049) and the fixed rates are still higher than many standard variable rates. They advise people not to be seduced by the low standard rates and to fix now, as house prices are continuing to fall and it might be difficult to get a 90% loan in the future should standard variable rates rise.
I think their advice is wrong. We are going to have low standard variable rates for at least the next year. And yes property prices are falling, but borrowers can use the savings from the falling standard rate to overpay their mortgages to bring the loan down. It’s certainly a lot cheaper to do that than to commit yourself to a fixed rate with an expensive arrangement fee.
In any case, all borrowers who can overpay without penalty should be looking to get their loan-to-value below 80%. For ways to raise money money to pay off debt, please see the categories in the sidebar for “earning money” and “earning money online”.
