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2008 ended in a flurry of activity in the mortgage market as the Bank of England slashed interest rates in both November and December. As we start 2009, we’ve seen yet another rate cut, but many borrowers will still be feeling nervous as lenders remain cautious with their mortgage business and house prices continue to fall.

However, it is still important to stay on top of your mortgage in 2009 and make sure you’re not paying more than you need to. These tips can help you through the year ahead:

Don’t bury your head in the sand

With all the stories of lenders withdrawing mortgage deals and tightening their lending criteria, you might think there’s no point in looking for a new mortgage, but this is not the case.

There are still plenty of decent deals around, whether you’re looking to buy a home or just switch your mortgage to a new deal. Also, even if you decide to stick with your current lender, make sure you’ve got the best deal they can offer you.

Review your mortgage early

If your current deal is coming to an end in 2009 you should start the search for a new deal sooner rather than later. With house prices forecast to continue falling in 2009, the equity in people’s properties will continue to fall. As lenders offer lower interest rates to those with more equity in their property, the longer you leave it, the less chance you may have a getting a competitive rate.

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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

It therefore makes sense to start shopping around as much as six months ahead. Mortgage offers are typically valid for three to six months, so it’s possible to secure a deal now even if your current mortgage has a few months to go. Make sure you check if you have any Early Repayment Charges and when they end.

Overpay

One of the positives for mortgage borrowers in recent months has been the slashing of the Bank of England Base Rate. It currently stands at 1.5% and many forecast further cuts in the New Year. Those that have seen their monthly payments fall could take the opportunity to overpay on their mortgage and help reduce the amount they owe more quickly.

Overpaying can help increase the equity you have in your home, which can improve your chances of getting a good rate when your current deal ends. It can also help cut the overall cost of your mortgage over its lifetime. Most mortgage deals will now carry some flexibility to allow overpayments to be made without incurring an Early Repayment Charge but it is important to check the specific terms. Some lenders allow overpayments of up to 10% per annum whilst others allow up to £500 per month.

Consider a fix

Following the recent cuts in the Bank of England Base Rate, the rates that lenders are offering for fixed rate mortgages have also started to drop. With the Bank Rate at a historic low, now could be a good time to secure a fixed rate if you’re concerned about your finances in the current climate.

Opting for a fixed rate makes budgeting easier as you know exactly what your mortgage payments will be over the term of the fixed rate deal.

Make sure your mortgage is protected

It’s always important to have protection in place to cover your mortgage, but in the current market, it’s as important as ever to protect your family and your income. Think about your budget and how much you could afford to spend – remember some cover is better than none.

If you’re on a variable rate mortgage and your payments have reduced recently, now could be a good time to use some of the saving to improve your level of cover.

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