Should you fix all your bills? by Finance News Bulletin

Published: 31/08/07

With the cost of living increasing faster than wages, and interest rates likely to increase at least once more, it can be tempting to lock into set deals for everything from your mortgage and savings to insurance and usefulness bills But are you being overcharged for this peace of mind Rosanna Spero considers whether you should fasten your life

This is cash has been named Financial Website of the Year in recognition of its campaigning coverage >> ReadChancellor Alistair Darling needs to see more mortgages fixed for up to 25 years But with base tax at 575% and experts predicting another increase, should we be fixing at all

Mortgage payments in May accounted for 199% of takehome disburse and averaged £593, according to the Woolwich Mortgage Affordability SurveyThe latest rise will have further exacerbated the situation steal from Clifford, chief executive of Mortgageforce, says: 'Having certainty of monthly outgoings is value its weight in gold, especially for populace who are stretching themselves to take out the loan

'People have been buying twoyear fixes, but with arrangement fees and other costs so far above the ground, we are now seeing more three and five-year fixes being in use out to keep away from paying these fees so regularly' According to the Council of Mortgage Lenders, three out of four borrowers took out a fixedrate loan in the history few months, though trackers, which follow base speed up and down, are becoming more popularDavid Hollingworth, at broker London & state, says: 'Fixed tax are going up as lenders factor in possible future bottom rate risesTrackers are cheaper, but you have to accept that the rates are likely to go up before coming down, so you have to make sure you can afford higher journal payments

'The rates for three and five-year fixes are quite similar, so the key is to do your homework to get the best deal and make certain you are clear how long you desire the fix to last for' Top deals, according to London & state, include a two-year fix at 549% from Cheshire structure Society with a £899 arrangement fee giving journal repayments of £61349 on a £100,000 loan

Alternatively, Stroud & Swindon is contribution a 554% two-year fix with an £899 fee creation repayments of £61648 a month Over the two-year term, they price £15,622

76 and £15,69452 respectivelyIf you can manage with interest rate rises, then BM Solutions has a 031% discounted follower rate (5

44%) giving repayments of £61051 a month with a £599 feeOver the two years, it would cost £15,25124 — but if rates go up again it will cost more

For those wanting to fix for longer, Mansfield Building civilization has a five-year fix at 575% with a £595 agreement fee, costing £62911 a month and £38,34160 over the five-year term

VERDICT: value fixing if you are stretching yourself financially to the boundary, or want to know exactly what you have to pay There is a danger that you could be fixing at the top of the market, so if you could cope with one or two more bottom rate rises, trackers may be betterThis is Money is packed with news, recommendation and tools that can assist you get ahead and save moneyRising interest rates give savers a better deal for their money

Top online variable-rate savings accounts comprise Sainsbury's Bank at 625% before tax (5% after economy tax) from August 1, and Icesave at 62% (496%)

Icesave pledges to be at least 025% above the bottom rate until October 2009, and the Sainsbury's explanation will beat the average rate paid by a storage bin of accounts until December 2011But by fixing, you can make higher rates now and will continue earning them even if variable rates drop The top deal comes from Coventry structure Society at 5

24% after 20% savings duty (655% before duty) fixed for one, two or three existence on balances of £1 or moreClose behind comes Halifax paying 522% (6

53%) on £500 advantage, fixed for one year to savers who sprint the account over the internet, and Leeds Building civilization at 52% (65%) fixed for two years on £5,000 or more The Coventry and Leeds bonds are on offer through twigs, post, or over the internet

Leeds also gives you right of entry to a quarter of your money during the word without chargeNationwide's tax-free cash Isa bonds pay 615% fixed for one or two existence on cash Isa money, minimum £1 You can also move your existing money Isas into this account, but it can take up to 30 days to transfer from your existing provider and there is no guarantee that the rate will be around then

Marks & Spencer's pays 616% fixed for one year on £500 or more On variable rates, nationwide Savings & Investments money Isa pays 63%, but you can't transfer other Isas into it

VERDICT: If you can bind up your cash for a year or more, then consider fixing, because these rates are likely to be the best on offer for several yearsThe Halifax is currently trumpeting the reimbursement of fixing your home insurance for three years The contract freezes your premiums for 36 months provided you put on't make a claim RIAS has a alike deal for two years aimed at the over-50s

But home insurance is one of the most spirited areas of cover, and prices have barely risen over the past few years According to the AA, the average cost of house contents insurance was £14356 when it launched its British Insurance best Index in July 1994Now the average cost is only £149

13, which includes insurance premium tax at 5% This was not introduced until later in 1994 — so in real conditions prices have fallen According to Moneysupermarketcom, a four-bedroom semi-detached house in Chelmsford, with £200,000 reconstruct price and £30,000 contents would price £110

25 to insure, bought online through Tesco, or £11235 a month with 12 months for the price of nine through straight LineThe Halifax deal, however, costs £22825 a year with a three-year cost freeze or £174

83 without it, while RIAS charges £18325 for its two-year fastenRichard Mason, director of insurance at Moneysupermarketcom, says: 'If you do not make any claims, you become a better risk each year to an insurer, and therefore you should insist cheaper insurance

To be offered the same price each year is not that attractive'VERDICT: Not value fixing with rates fairly static Such a deal would be value paying for only if claims did not affect the confine — which no insurer at present offersAfter reaching record highs in 2006, energy bills have been falling over the history six months

Karen Darby, founder of Simply Switch, would not advocate fixing or capping power pricesShe says: Fixed and capped deals are expensive at the moment costing about 5% more cheapest speed available 'I would propose find cheapest deal without a tie-in and if it seems like bills are going down then seem to fix or cap time' USwitch says households could put aside an average of £132 moving from their suppliers normal plan to an online one/VERDICT: Don't fasten your energy prices, review your supplier each year and remember the three golden system

Best deals are available if you pay money for both gas and electricity from the same supplier, pay by straight debit, and choose an online tariffPMI is bought on an yearly basis, but in reality most people stick with the same supplier to make certain that any pre-existing conditions continue to be coveredSome insurers, such as Exeter Friendly civilization and Norwich Union Medios, maintain to fix the price when you join and only impose increases to cover medical price rises rather than your era as well Those who have era-related increases in premiums often see prices shoot up as they reach milestones such as 60

Policies that maintain to freeze your age are more expensive than those that don't A 50-year-old gentleman would pay £7019 a month for the Exeter Low Cost diagram, and £12619 for the Norwich amalgamation Medios Healthcare plan, but £35

46 for equal cover from AXA PPP Healthcover with no age-related freezePhil Taylor, organization director of Preferred Medical, says: 'Those firms that maintain only to raise rates by medical inflation each year have managed to keep increases to 6-7% rather than the 8-10% in the wider marketBut the actual premiums create 30-40% more expensive, so you could have, say, 15 years of agerelated increases before you ever wedged up' He says that if populace want to fix their premiums, National Deposit Friendly Society's Healthcare put Account is a good option

You can fix the premium for life at the onset and half goes into a savings account and the other to fund your health mind Benefits are limited, and for example, if you put in £100 a month you have a utmost £50,000 of health careVERDICT: Plans impressive both age-related and medical inflationlinked increases each year will be more price effective for most people The dissimilarity in price reduces with age, so age-fixed ones may be more attractive to older people

Income protection insurance provides a tax-free income if you are unable to labor due to sickness, injury or redundancy You can either take out a rule with guaranteed premiums or reviewable onesCritical illness cover pays a taxfree lump sum on analysis of a range of conditions such as many cancers or caress, and also offers a guaranteed or reviewable premiumIt costs a lot more to guarantee both types of premiums

A 40- year-old man deficient £2,000-amonth income replacement would pay £11152 for a set premium and £7494 for a reviewable one The same man wanting £200,000 of critical illness cover would disburse £73

89 a month for reviewable cover but a astounding £14980 for a guaranteed oneDave Maharaj, managing manager of income protection specialist independent intermediary PHA cover Services, says: 'You should always take the guaranteed rate if you can afford it, as you lag yourself against large premium increases every five or ten years'If you can't have enough money it immediately, take the reviewable one so you have cover and then swop as soon as you can have enough money to

'VERDICT: Although costs are initially higher, the assurance gives a peace of mind that is worth paying forchoose a loan term 12 months (1 year) 24 months (2 existence 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a kind of insurance Life insurance Home and contents Car Breakdown services physical condition - medical physical condition - dental Travel Pet - dog Pet - cat GOThinking about investing in property This is cash has the

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