More solicitors look to the conveyancing market as fixed term mortgages end
Article by Catherine Moody
More people are looking to the conveyancing market for mortgage options as their fixed term mortgages come to an end. Solicitors are finding the market to be lucrative, despite the current economic climate, as a wave of home-owners see their fixed term mortgages come to an end and look to remortgage their homes to release cash. As credit card and loan interest rates rise and unemployment becomes a real risk for a lot of consumers, many are looking to pay off as much debt as quickly as possible by releasing equity from their homes.The Bank of England base interest drops in the last few weeks have seen those with fixed mortgages receive the short end of the stick. While homeowners with tracker mortgages saw interest rates plummet to below 1%, consumers with fixed rate mortgages were still trapped under interest rates of around 6%.Fixed mortgages work by offering consumers a fixed interest rate. This means they will be making the same monthly payments throughout the fixed term, regardless of whether the lender’s interest rates go up and down. When interest rates started to rise last year as the credit crunch took hold, those with a fixed term mortgage were better off than consumers with tracker mortgages, which change according to lender’s interest rates. However, now the base interest rate has fallen, a lot of homeowners whose fixed term mortgages are coming to an end are looking to find a new mortgage deal in order to take advantage of the current interest rates. Fixed mortgages can last from two to 25 years and there are pros and cons associated with both short term mortgages and long term contracts. With any length of fixed term contract, you will always know what will be paying each month, making it easier to budget. This might be especially useful if your mortgage payments make up the majority of your outgoings each month. However, there are also drawbacks associated with fixed rate mortgages whether they are long term or short term. For instance, if the interest rates drop significantly during the term, fixed rate mortgage holders would not benefit from that and could end up paying significantly higher interest on their payments than those with a tracker or variable mortgage. The fixed interest rates are generally higher for longer term fixed rate mortgages than for shorter term so it is worth doing the maths and working out how much you could save by signing a shorter contract and remortgaging every few years. Once the fixed term rate ends, homeowners will have to pay the lender’s variable rate which might significantly increase their monthly payments suddenly.Something to consider when deciding the length of a fixed term mortgage is the early repayment charge. Many mortgages have this, meaning that if you pay the mortgage off before the term is up you will have to pay a fee to the mortgage lender. A lot can happen in a few years and it is important to consider how your personal circumstances could change before signing up for a longer term contract.Due to the current financial crisis, homeowners coming out of fixed term mortgages are looking for the best interest rates lenders have to offer. This means more solicitors are finding a niche in the conveyancing market. Although it is possible for a homeowner to carry out the conveyance services themselves, it is much more time efficient to look for a qualified professional to do the job. The conveyancing market is very competitive, with both solicitors and specialist conveyancing firms offering consumers their service. This means it is possible to find someone to carry out conveyance work for a low price and help homeowners find the best deal they can when they remortgage.
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