Mortgages
The record low Bank Rate has been the saving grace for many households. And it is likely to be a saviour for a good while yet. The dire state of the economy has increased the likelihood that it will remain at 0.5pc for the foreseeable future – perhaps even until 2014, many economists suggest.
However, the downside for borrowers is that house prices are falling and they have done so for 10 months consecutively, according to Land Registry data. It is the price slide that borrowers need to consider when applying for a home loan.
Check out the lender's standard variable rate (SVR) before falling for a cheap two-year deal, as you could end up paying more over the long term. Once the deal is up, you could be stuck on a lender's high SVR for years, if prices have fallen and erased any equity you may have had in your home. This will make it difficult to remortgage.
Ray Boulger of John Charcol, the mortgage broker, suggested that if you were already on an SVR of 3pc or less, you should stay put. He added: "If you want to opt for a fixed-rate deal or a tracker mortgage, don't consider a two or three-year deal."
Tip: Overpay your mortgage if you can. Based on taking out a 25-year home loan of £100,000, overpayments of £300 a month would pay it off 12 years early. You would pay back £123,084 rather than £146,988 – a saving of £23,903.
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