Home loans: early exit can pay off

28 November 2008

People who took out a fixed-rate home loan when interest rates were high could save money by applying for a new, cheaper home loan.

As The Times reports, some advisers ‘are urging borrowers who locked into deals at the height of the credit crunch to break their contract, despite exit charges and rising remortgage fees’.

It gives an example of borrowers with a two-year fixed-rate interest-only £200,000 home loan at 6.25%. Even after paying an early redemption charge and an up-front fee, they could still save almost £4,500 by switching to a 4.79% tracker – assuming they had a 25% deposit.

If they had a 40% deposit, they could save almost £9,000 by switching to the currently market-leading home loan – a lifetime tracker mortgage that charges 3.99%.

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Tags: loans, loan, cheap, cheap loans, cheap loan, getting a loan

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