BEAT THE BIG CASH

BANK of England Governor Mark Carney has warned of a ‘challenging time’ ahead due to rising inflation and wage stagnation. The Mail on Sunday shows the best ways to beat the squeeze while protecting savings.

HOUSEHOLD BILLS

ALMOST half of households do not shop around for their gas, electricity, broadband and phone providers. This is despite the savings totalling hundreds of pounds a year for those who switch.

Moving energy supplier can save as much as £300 a year while broadband costs could be slashed by £100. The biggest savings will typically be made by households that have not switched before and where they are paying standard variable rate tariffs for their energy. These tariffs have risen in price by an average 14 per cent over the past five years.

A typical family paying their energy bills monthly by direct debit on a standard tariff with British Gas will pay about £1,044 a year for their gas and electricity, based on average usage.

By switching to one of the cheapest fixed rate tariffs with Avro Energy, they could save £165 over 12 months. Consumers must pay by monthly direct debit to take advantage of the best rates.

Although an energy price cap could be on the way following the General Election, people should take action now to make savings. Websites such as uSwitch, energyhelpline and gocompare are easy to use and will complete the switch for you.

Even consumers who have switched to competitive fixed rate fuel tariffs are being warned to check when their deal is due to expire as a range of tariffs with seven big providers – including EDF Energy, First Utility, ScottishPower and npower – are coming to an end in the next few weeks.

Failure to switch will mean tens of thousands of consumers could pay up to £400 a year more – as they will automatically be moved on to their provider’s standard tariff.

Broadband users who have not switched for years and are no longer on a competitive contract (lower price contracts are offered when a new customer signs up with a provider) are likely to be paying around £100 a year more than those on the best deals.

The cheapest broadband deals are offered by Plusnet at £18 a month or TenTel at £18.50 a month. These prices include phone line rental.

Go back to your existing provider armed with the best-buy deals to see if they can match them. Some companies will offer big discounts to avoid losing customers.

MORTGAGES

HOMEOWNERS paying their lender’s standard variable rate will invariably save money by securing a low fixed rate, discount or tracker home loan.

Fixed-rate loans have never been so appealing. For example, HSBC has just launched a five-year fix at 1.69 per cent – available to those with at least 40 per cent equity or deposit on their property.

Other competitively priced fiveyear fixed rate loans are available from Yorkshire Building Society (1.74 per cent, 35 per cent equity) and Leeds Building Society (2.2 per cent, 15 per cent deposit).

Two-year fixes start from 1.18 per cent (Yorkshire Building Society). Ten years of payment security can be bought at a mortgage rate of 2.49 per cent (Coventry).

Yorkshire also has one of the best discounted rate deals with a starting rate of 0.89 per cent over two years (3.85 per cent discount off its standard variable rate of 4.74 per cent). Remember though, if the Bank of England puts interest rates up this mortgage rate will rise. Borrowers need 35 per cent equity.

HSBC has a two-year tracker deal – where the rate tracks at 0.84 per cent above the Bank of England base rate of 0.25 per cent giving a starting rate of 1.09 per cent. Again, the pay rate will rise if base rate increases.

HSBC also offers a lifetime tracker at base rate plus 1.84 per cent. This means a starting rate of 2.09 per cent and is available to those with 40 per cent equity. Switching lender is quick and simple, and a fee-free broker can guide you through the process. Borrowers on a standard variable rate will usually not be charged any penalty to move lender.

To give an example of the savings, a borrower with a £200,000 repayment mortgage paying Nationwide Building Society’s standard variable rate at 3.74 per cent would be paying £1,027 a month. If the same borrower switched to the two-year fixed rate at 1.18 per cent with Yorkshire, their monthly repayments would fall to £770. Even after paying typical setup fees of £995 the savings over two years would top £5,000.