Is a fixed rate remortgage the best choice for borrowers wanting to switch?
Many borrowers are wondering if a fixed rate remortgage is their best option when looking to change their mortgage deal. The combination of low interest rates and fierce competition between lenders has made it possible for borrowers to find cost effective solutions.
An uncertain financial climate means it can make sense to look for longer term fixed products that will provide security. Crisis in the eurozone has caused lending costs to rise and some mortgage providers are beginning to pass these increased costs on to borrowers through their mortgage rates.
Borrowers are recommended to examine their existing mortgage product on a regular basis and now is the time that most lenders will send out their annual statements. For borrowers coming to the end of an agreed mortgage term, the deal will generally revert to the lender's standard variable rate. For those borrowers it may be worth switching to fixed rate remortgage product as some standard variable rates can be as high as 6 per cent. Some lenders are also offering borrowers the option to switch from a tracker to a fixed rate deal without incurring a repayment charge.
Fixed-rate deals, where a set amount is paid each month for an agreed period, are ideal for people who want to know how much their mortgage will cost for the next few years. Such deals protect borrowers from interest rate rises. Currently it is possible to find 5 year fixed rate remortgage deals from around 3.5%, although an arrangement fee of around £2000 may be charged.
