How early birds can catch a cheap rate

HOMEOWNERS who are worried about missing out on cheap mortgage deals can lock into a rate months before their current deal ends.

In some cases they can sign up for a deal six months in advance of a house purchase or three months before an existing deal ends.

The average two, three and fiveyear f i xed- r ate deals have increased since December.

Worried borrowers can fix a rate now, to coincide with when their current deal ends. But they risk losing out if their bank reduces rates in the months after an application has been made. Also, trying to switch before completion could see homeowners penalised — even if you’re not moving to a different bank.

Experts are warning homeowners not to panic buy or remortgage unless they’re certain of the deal they want.

The average rate for a two-year fixed-rate mortgage has risen steadily since September, according to statisticians Moneyfacts, from 4.16 pc to 4.36 pc.

Thi s has increased the repayments on a typical £150,000 loan from £805 to £821 — or £384 extra over two years. Three and five- year deals have notched higher since the start of the year, compared to consistent falls last year. This has increased the cost of a five-year deal by £300 — a sum many cash-strapped households can’t afford to lose.

‘Smaller lenders have found their services under pressure,’ says Ray Boulger, senior technical manager at mortgage brokers John Charcol.

‘Some have withdrawn from the market in order to catch up or have put up rates across the board to maintain service standards.

‘There is the danger that after these restrictions are ditched, rates could fall again. This would leave borrowers who have pre-arranged their rate wishing they hadn’t.’