The Fixer: should I switch my mortgage?
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Dear Fixer,
When my fixed-rate mortgage with Barclays came to an end recently, I was moved on to the bank's standard rate of 4.99%.
It's actually only slightly higher than the rate I was paying before, but I know there are better deals available and so am thinking about switching to another bank.
However, after 15 years in my current home, I only have about £30,000 left to pay off and hope to be mortgage free within five years.
Is it worth going through the hassle of switching my mortgage when it is so small?
G Smith, London
Dear Mr Smith,
The arrangement fees involved in remortgaging mean it may not be worth switching if you only owe a small amount on your mortgage. However, there are some great deals available at the moment.
HSBC, for example, has a five-year fixed-rate mortgage at just 1.99%, albeit with a £999 arrangement fee.
A quick calculation shows that staying on your current rate of 4.99% while paying off your mortgage for the next five years would cost you £3,959.97, whereas switching to the HSBC deal would mean paying out a total of £2,541.09 - including the £999 fee.
You could therefore save more than £1,400 by remortgaging, despite the small size of your loan. Probably worth the time it will take to arrange a switch!
Before making a decision, I would nevertheless recommend contacting a fee-free mortgage broker such as London & Country to get some independent advice.
The Fixer
Whatever your financial problem, write to themoneyfixer@aim.com and The AOL Money Fixer will get on the case.