Thrifty Loans

Over recent months there has been much concern about homeowners that are currently on cheap fixed rate mortgages that are due to come to an end over the coming year.

Many homeowners took out fixed rate loans when interest rates were much lower a couple of years ago, but since then interest rates have rocketed with a series of five 0.25% hikes between August 2006 and July 2007.

Whilst interest rates have dropped twice by 0.25% each time in the last few months, many could end up paying far more than they are currently paying when their cheap fixed rate deal comes to an end.

According to officials from the Financial Services Authority around 1.4 million homeowners are likely to face rocketing mortgage costs over the course of this year when their cheap fixed rate mortgage terms come to an end.

A number of authorities including the Council of Mortgage Lenders, the Money Advice Trust Charity, and MPs, have been working to put together advice for homeowners that are in this position. It is thought that many could face repossession when they suddenly find that their repayments are too high to cope with.

An official from the Money Advice Trust Charity stated: “The idea behind the initiative is to give free early advice to these borrowers coming off their fixed-rate deals and highlight key sources of independent and free confidential advice, such as adviceUK members, Citizens Advice Bureaux, Business Debtline, National Debtline and the Consumer Credit Counselling Service.”

She added: “We have already seen a 16% increase between 2007 and 2008 in clients contacting National Debtline for advice regarding mortgage and secured loan arrears and we fear that people really are starting to struggle with their mortgage payments as credit becomes more expensive to service. Our experience suggests that if you do get into difficultly, seeking free independent advice as soon as possible is the best option to help you sort out your problems. There is always something that can be done and the earlier you seek advice the more options you will have.”