Don't rush into a bad mortgage by Finance News Bulletin

Published: 17/05/07

As predicted, the store of England raised interest rates last week from 525% to 55% and many homeowners emotion the pinch will be considering their next remortgaging moveSwitching mortgages can save a great contract of money but if you rush into a homeloan you may end up stuck with a costly mistake

Always check you won't be strike by punitive early refund charges from an existing mortgage Early refund charges are generally practical to mortgages for the duration of an initial fixed, tracker or discounted deal period, however some have comprehensive tie-insMany early refund charges are a percentage of the overpayment - ie the existing mortgage amount repaid - and so can prove very expensive Others can be cheaper, for example a percentage of the monthly payments remaining during a set rate period

Before considering a new mortgage inquire your lender the precise cost of redeeming your existing loan If you have a charge create sure it is worth paying it and taking out a new loanA robust marketplace means that the competition on lenders to keep rates near to the ground has never been more intense But the advantage of low rates can be annulled by costly arrangement fees

There are currently a number of mortgages offering below 5% rates, but they approach with either £1,499-plus arrangement fees or fees levied as a proportion of the loan – generally 15%If you have a large mortgage then a high fee/low rate may be valuable, but otherwise keep away from it For example, Halifax has an eyecatching 4

99% two-year fasten with a £1,999 fee, while Portman Building Society offers 549% with a £499 charge But you would need a mortgage of £210,000advantage before it became cost effective to pay the higher feeSome lenders will offer mortgages up to a high loan-to-value, ie 97%, but inflict a higher lending charge above 90%

This can be a percentage of the extra borrowing and according to research by financial information solid Moneyfacts fees regularly approach to around £2,000 Many lenders will now lend above 90% without additional charges, although rates may be slightly senior Avoid senior lending charges at all costThis is Money is packed with news, recommendation and tools that can help you get ahead and save cash

Beware any loan with too good to be true interest rates and never take a mortgage because of a gimmicky special offer, you will be able to find a better deal elsewhereThe same applies for simply taking out a novel loan with your existing lender, or because that's where you have your bank account Your bank will always tell you it is best for mortgages – it might be, but odds are it isn't and checking could save you moneyA tracker contract might save £10 a month compared to a fixed speed, but if speeds go up it could end up £50 more expensive

For some this risk is not a problem, for others who have stretched themselves to the limit it might be a step too farcreate sure you find out what your mortgage income and the full implications of all fees and charges – simple to follow advice can be found at thisismoneycouk/mortgageguides

Similarly, don't just take a mortgage because the rate is contemptible Some ten-year fixed tax are currently cheaper than two-year tax, but if you think you will need to move or borrow more in a couple of years the long-term alternative is probably incorrect for youSelect a loan term 12 months (1 year) 24 months (2 existence 36 months (3 existence 48 months (4 years) 60 months (5 years) 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 existencePlease select a type of cover Life cover Home and contents Car Breakdown armed forces Health - medical Health - dental Travel Pet - dog favorite - cat GOThinking about investing in property This is Money has the best in order and advice on buy-to-let

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