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Hedging your bets? Switch and Fix.

Author: Andy Bedford » Publish Date: 9 July 2009

I wrote recently about the tough decision some people have about whether to fix their mortgage now; or wait on their standard variable rate, exposed to potential rises.

With today’s announcement that the Bank of England Base Rate will stay at 0.5%, the decision hasn’t got easier.

There is, however, a nifty product currently being offered by the Nationwide Building Society (one of the few lenders still vying for new business).

It allows you to take one of their current tracker products now and switch it to a fixed rate whenever you choose; without incurring early repayment charges.

Other providers have similar offerings; however, a key difference sets them apart.

The Nationwide will allow you to switch to a fixed rate based on the Loan-to-Value of the valuation taken when you arranged your tracker, which means that if house values continue to fall, you can still access new deals.

You will have to pay a second arrangement fee, however. And you will be restricted to the fixed rates available when you decide to change, which could be higher than those available now.

But if you are not sure which way to turn, this at least offers a get-out clause which typical tracker products will not.

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. PLEASE NOTE THAT SOME MORTGAGES SUCH AS COMMERCIAL BUY-TO-LET ARE NOT REGULATED BY THE FCA.

RIGHTMORTGAGEADVICE.CO.UK FCA NO. 500795 IS AN APPOINTED REPRESENTATIVE OF JULIAN HARRIS MORTGAGES LTD FCA NO. 304155, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

THE FINANCIAL OMBUDSMAN SERVICE (FOS) IS AN AGENCY FOR ARBITRATING ON UNRESOLVED COMPLAINTS BETWEEN REGULATED FIRMS AND THEIR CLIENTS. FULL DETAILS OF THE FOS CAN BE FOUND ON ITS WEBSITE AT WWW.FINANCIAL-OMBUDSMAN.ORG.UK.

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