Save Thousands by Breaking Contracts

House owners who opted for expensive fixed-rate mortgages could be at an advantage by thousands of pounds by paying early with penalties. Experts are advising borrowers to break their Fixed Rate Mortgage loan in spite of exit penalties and increase in mortgage charges. Borrowers with a deposit of 25% who took a fixed loan at 6.25% on a £200,000 interest-only loan in June could save as much as £4,489 after choosing a tracker option at 4.79%. Individuals with a 40% deposit will fare better with HSBC’s lifetime tracker deal at 3.99%. Mortgage Monitor’s Les Jacobs said that many house owners have locked into fixed-rate deals for stability but are now paying more. The demand for tracker have increased with the Bank rate dropping to 1.5% last month and expected to fall further. Last month 68 trackers were available compared to only 30 two-year trackers this month. UK’s largest building society, Nationwide is not providing any tracker option thereby stopping all new borrowers from taking advantage of interest reduction. However, even if you shift from one fixed rate to another, you can still save some money. For example, David Roberts was paying 5.84% to Woolwich but saved considerable amount by moving to 4.49% rate of Abbey.

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