Which? urges people to check their mortgage dealsBase rate cut brings unexpected benefit for some

12 November 2008

Mortgage customers looking to switch mortgages at the end of their initial deal should check their current deal carefully first as they may be in for a pleasant surprise.

People coming to the end of a fixed or tracker mortgage deal may discover their mortgage reverts to a tracker deal rather than their lender's standard variable rate. 

Market beating rates for some

Most mortgage deals revert to the lender's standard variable rate at the end of an initial deal.  But some deals which are coming to an end now switch on to a base rate tracker instead.

For example, in 2006 Alliance & Leicester offered a two year tracker at 0.16% below base which has just come to an end. It will now revert to a bank base rate tracker at 0.99% above base.   Following last week's 1.5% cut in base rates, customers on this deal will now pay just 3.99%.  The average standard variable rate among the ten largest lenders, which most mortgage deals revert to, is 6.7%.

Check your deal 

Alliance & Leicester isn't the only lender that offered these types of deals.  David Hollingworth of mortgage brokers London & Country told us: 'There were a lot of lenders who offered these sorts of deals from time to time.  Not all track at such favourable rates as the Alliance & Leicester ones but it's definitely worth checking your own particular mortgage.'

Martyn Hocking, Editor of Which? Money, said: 'Our usual advice to people is to switch when you come to the end of your initial mortgage deal as you can usually save a lot of money.  But if your mortgage deal does revert to a base rate tracker you may find that you can't beat the rate. The other advantage is that you won't be tied in to this rate so if base rates do start to rise again you'll be free to switch at any time without paying a penalty.'

If your mortgage won't revert to a base rate tracker, visit the Which? interactive mortgage calculator. This allows you to compare the true cost of thousands of mortgages, taking all of the fees and charges you’ll pay into account. Plus we round up the latest and best mortgage deals.

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