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- Is your mortgage lender passing on the base rate cuts?

The Bank of England Base Rate fell again in February, taking interest rates to an all-time low of just 0.5%. Great news for new borrowers and people on variable rate deals, but what if you’re already locked into a fixed rate mortgage?

During 2007 and most of 2008, the Base Rate was 5% or higher and if you took out a fixed rate during this time, you may be envious of those lucky borrowers who have been benefiting from the recent rate cuts and have seen their monthly mortgage repayments plummet.

However, even if you are tied into a fixed rate and have a while before it finishes, you may still be able to get in on the act.

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Todays best buys

Lender	Initial rate	Scheme type	Overall cost for comparison (APR)
	3.99%	Fixed until 31/12/10	6.8%	enquire
	4.39%	Fixed until 31/01/11	4.7%	enquire
	3.49%	1.49% above base for term	3.6%	enquire

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Banks and building societies are slowly bringing down the rates on new mortgage deals following the Bank of England’s latest cut, so if you’re tied into a high fixed rate you could still save money with a new deal, even if it means paying an Early Repayment Charge (ERC). An ERC is a charge that lenders impose on most mortgage deals – payable if you repay the mortgage before the deal ends. ERCs are usually a percentage (typically around 3%) of your mortgage balance.

At the beginning of 2008, when the Base Rate was 5.5%, many fixed rates were around the same level, whereas you can now fix at under 3%. Saving 2.5% on a £150,000 interest only mortgage would cut your payments by over £300 per month.

There are a few things to check if you are considering switching deals, as it won’t make financial sense for everyone. Whether it’s worthwhile will depend on a number of factors including how long your current ERC lasts for, the interest rate you are paying and how much the ERC would be if you switched.

The amount of equity you have in your property is also important, as this will dictate how good a new rate you can get. AOL’s mortgage service offers an online mortgage calculator, which will work out the interest rate you would need to get in order to make switching to a new deal beneficial.

- Early repayment charges