Competition hots up for remortgage deals; Finance Doctor.

IN THE current climate most people that have come to the end of their mortgage deal have been finding that if they stay with their current lender on a standard variable rate their payments have actually come down.

Also it has been very hard for the last year or so to find any alternative remortgage deals that offer better terms than just staying on the standard variable rate of your existing lender. This does, of course, depend on which lender you are with. Though most lenders have a standard variable rate in the range of 3.5 per cent to 4.25 per cent, some lenders, Standard Life Bank, for example, are still charging 5.34 per cent.

The good news is that remortgage deals seem to be becoming more competitive and there are plenty of deals offering free legal fees and free valuations thus minimizing the cost of transferring to an alternative lender.

There is still generally a fee involved on the lower rate remortgage deals but if you are making a saving on your interest payments then you can check to make sure that you will be saving money overall.

Another possible reason for a remortgage could be to find a competitive fixed rate. There is still a lot of sense in times of uncertainty to know what your mortgage payments are going to be so shopping around for a fixed rate could be beneficial.

A very low tracker rate *If your main priority is keeping your monthly costs down in the short term but you would also like the prospect of a lowish rate in the longer term as well, then Woolwich has an extremely low lifetime tracker rate of 2.97 per cent initially. This is a tracker rate of Bank of England base rate plus 2.47 per cent for the whole term of the mortgage. The penalties are not too harsh either at one per cent of the loan plus pounds 275. There is an arrangement fee of pounds 1499 but free legal fees and a free valuation are provided.

The maximum amount you can borrow is 70 per cent of the value of the property.

A lower fee tracker rate: *If you like the idea of a deal with free legal fees and a free valuation but would rather have a deal with a lower fee than the one above then Abbey has a tracker rate for three years with an initial rate of 2.99 per cent. This is Bank of England base rate plus 2.49 per cent followed by the standard variable rate, which is currently 4.24 per cent. The booking fee is pounds 995 but this can be added to the loan. The penalties last for three years and are two per cent plus pounds 225. The maximum amount you can borrow is the same at 70 per cent of the value of the property and the deal is portable.

A fixed rate *Fixed rates give you the security of knowing what your payments are going to be. Coventry Building Society offer a fixed rate of 3.95 per cent until 30/09/2011. Once again it provides free legal fees and a free valuation but has a booking fee of pounds 199 and an arrangement fee of pounds 800. The penalties last until 30/09/2011 and are four per cent of the loan amount plus pounds 125. The maximum amount you can borrow is a bit restricted at just 50 per cent of the value of the property.

Compiled by Tim Twiddy of *Atlantic Investors, a Chartered Financial Planning company. Freephone 0800 163659.