The base rate is changing within the coming months.  That is a fact which is almost a 100% guarantee.  Even though this will take place and affect thousands of homeowners, many are still unaware that a change in the rate will change what they pay for their monthly mortgage.  The number actually dwarfs thousands and is an estimated 3.5 million who are unaware of what will take place.

Tracker mortgages make up an estimated 13% of the entire mortgage market, with variable rate mortgages taking up an even larger piece of the pie at 16%.  The economic crisis has caused many to go into arrears and even lead to repossession.  Almost a quarter of a million homeowners have changed these types of loans over to interest only loans since the trouble began.  This is a risky practice, but exercised by many to avoid defaulting on loans.

Ray Boulger of John Charcol warns those who choose interest only and said: “Homeowners should be working towards getting back to capital repayment. The mortgage debt still has to be paid off.”

The words of caution have been heard by many, although sometimes few options are possible.  That is more true now than ever before, as lenders have even tightened their criteria and many are having trouble with a basic remortgage.

Boulger continued: “Borrowers who want to take their existing interest-only loan with them when moving house, either because they have a lifetime tracker or because they want to avoid big redemption penalties, for example, are increasingly being refused by their lender."