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Mortgage costs to rise by £500m as fixed rates end

Mortgage costs could increase by over £500m in the next six months, according to research from Impartial.co.uk.

In its Mortgage Waste report, the website says that around 1.2 million homeowners on fixed-rate deals, typically set at 5.5 per cent, with £98,900 outstanding on their mortgage, will be nearing the end of their deal within six months.

It says the cheapest fixed-rate deal on the market now is 6.15 per cent, meaning that annual costs for those coming off fixed rates could increase by £522m.

Marketing director Karen Barrett says: “With so many of the best deals gone since the start of the credit crunch a year ago, those that need to remortgage are worried about the prospect.

“If homeowners are happy with the tie-ins associated with fixed-rate mortgages, they should consider seek-ing advice to secure the best deal.”

The report shows that one in five mortgage holders on SVRs, typically set at 6.1 per cent with £58,200 outstanding, could save £705m a year by moving to lower rates.

The report says that 2.6 million are planning to remortgage in the next six months but, of those, only 31 per cent score themselves higher than six out of 10 in terms of how positive they feel about the process.

Fifty-three per cent score themselves four or less out of 10 and 14 per cent score themselves 0 out of 10.

The Mortgage Practit- ioner principle Danny Lovey says: “If you have got a situation where the client cannot afford the increase, it is worth looking at remortgaging them over a longer period of repayment.

“If that is not practical, you could remortgage and negotiate with their current lender to do part interest-only for a term to soften the blow temporarily.”

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