Borrowers need to plan carefully

Holders of fixed rate mortgages ending in the new year should start to think about their new mortgage over the Christmas break.

Despite the recent interest rate cut, with the bank base rate in December 2004 being 4.75%, anyone who fixed their mortgage rate three years ago will be facing a significant increase in monthly repayments.  Mortgage holders coming off a four year fix (from when base rates were only 3.75%) are going to be facing an even bigger increase.

With the busy festive period coming up, sorting out the mortgage is not going to be top of people’s to do list.  But to avoid reverting back to their lenders' standard variable rate and a significant increase in their monthly repayments, now is the time to think ahead.

The BSA recommends that borrowers should follow this four point action plan:-

1.   Talk to their existing lender regarding their mortgage options
2.   Review their other financial commitments in the light of possibly increased mortgage repayments
3.   Discuss any possible repayment problems with their lender as soon as possible
4.   Consider whether they need to look at their household budget to ensure that their finances are in good shape.