Homeowners Could Save by Exiting Home Loan Deals Early

Mon, 24 Nov 2008

Homeowners stuck with high interest fixed rate mortgages are being advised by some experts that they would be better off exiting their mortgage early, despite the penalties incurred. The premature termination of a mortgage agreement typically results in an early redemption charge of around 1.5 per cent. However, if an alternative mortgage providers if offering a significantly lower interest rate on a mortgage, it can be worth switching lenders.

Mortgage Monitor’s Les Jacobs said, ‘We’re seeing many frustrated homeowners who locked into deals in search of stability, but are now paying over the odds. Review, and you can yield huge savings ’.

With the current financial climate culminating in particularly ungenerous mortgage offers, those who have taken out a mortgage in the past six months could benefit most by switching. Despite incurring a 1.5 per cent early redemption charge, borrowers with a 25 per cent deposit who took out Nationwide’s two year fixed rate deal with an interest rate of 6.25 per cent could save £4,489 by switching to Cheltenham and Gloucester’s tracker deal charging an interest rate of 4.79 per cent. The best savings are available to those providing the largest deposits.
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