Experts are concerned that as many cheap loans switch over to variable rates that thousands of homeowners will be faced with a whole new struggling to make their payments. Although cheap loans start out well, if they do not have a fixed rate, they can quickly turn ugly. Consumers with cheap loans that are about to switch are urged to refinance before it is too late.
Ray Boulger, of Charcol, says the fee is worth paying: “Many borrowers will be coming off five-year fixed rates of less than 4 per cent in the next few months, while many others will be coming to the end of two or three-year fixed rates with rates well under 5 per cent. Switching to a new large loan fixed rate without paying a fee will mean paying a rate close to 7 per cent.”
“If you are coming up to the end of your fix, you should start looking for a new deal at least three to six months before you actually need it. If you see a rate you like but are not ready to switch yet, book it. “Rates can be reserved with most lenders for up to six months,” adds Melanie Bien of Savills Private Finance.
Related reading: Cheap Loan
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