Mortgage advice: finding the best remortgage rate

With the Bank of England`s base rate at an all-time low of 0.5% (as of 5^th March 2009), there are many good remortgage deals out there, if you can just find the right one. Mortgage lenders everywhere have dropped the price of their deals, tempting many people to move from fixed-rate mortgages to variable-rate deals - or the other way around!

Finding the right deal is something that depends on your personality as well as your financial situation. Some people are comfortable `gambling` that the base rate won`t go up, while others prefer to make higher payments today on the grounds that there`s no risk of them going up tomorrow. Others aren`t sure, and they`re looking for some mortgage advice to help them make sense of a confusing marketplace.

Which kind of deal might be right for you? You should never make your mind up without seeking one-to-one mortgage advice, but here`s a basic introduction to the three main types of mortgage...

Fixed-rate remortgage deals

The interest on a fixed-rate deal is fixed. Whatever happens to the base rate, your monthly mortgage payment won`t go up or down until you reach the end of your fixed-rate period.

Remortgage advice: if you`re worried about the base rate going up and / or that your monthly budget couldn`t cope with any increase in your mortgage payments, this could be the type of remortgage for you.

Standard Variable Rate (SVR) remortgage deals

The interest on SVR mortgages might change when the base rate changes - but it might not, as mortgage providers don`t actually have to raise / lower the interest rate they`re charging on these deals when the base rate goes up / down.

Remortgage advice: if your budget can cope with the possibility of higher mortgage payments, this could be a good idea, as SVR mortgages are unlikely to impose an early repayment charge if you change your mind and remortgage.

Tracker remortgage deals

The interest rate on a tracker mortgage (a kind of variable deal) will go up or down when the base rate does (normally the following month), which explains the name `tracker`. The rate on most tracker mortgages will always be a certain amount above the base rate, although they may have a minimum level known as a `floor` or `collar` below which the rate will never fall.

Remortgage advice: like SVR deals, trackers can be good for people whose budget could, if necessary, cope with the possibility of higher mortgage payments.

Mortgage advice: what does a 0.5% base rate really mean?

On the one hand, a base rate of 0.5% means you might be able to find an excellent deal if you`re looking to remortgage.

On the other hand, it also means the deals can`t get much cheaper. Anyone signing up to a tracker / SVR remortgage today knows it`s impossible for the rate to drop by more than 0.5% - but there`s no limit to how far it could climb!

If you`re wondering about what the issues in the UK`s economy could mean to you and your mortgage payments, you can phone 0800 195 2913 for free, no-obligation mortgage advice or click here for more on remortgages.

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