Homeowners Look For Financial Security
Millions of Britons are looking for financial stability, new research shows. In a study conducted by Abbey, an estimated 5.1 million, or one in three, homeowners claim that if they had to remortgage their property immediately then they would choose to fix the rate of interest payable for a period of five years or more. According to the findings, some 2.5 million people would opt to keep mortgage payments consistent for five years, while 1.1 million look for a ten-year deal. Meanwhile, some 1.5 million would like to see their rate stay consistent for 15 years. And in making sure interest rates remain at a consistent level, many homeowners could find their monthly payments stay the same, which in turn could help them to meet other areas of financial demand that they might face such as loans, utility bills and credit cards with greater ease.
The study also indicated a fall in popularity for the once well-received two-year fixed-rate deals. Over the summer, more than 40 per cent of respondents stated that they would choose this type of product. However, this level has now dropped to 12 per cent.
Commenting on the figures, Nici Audhlam-Gardiner, head of mortgages for Abbey, said: “For most of us our mortgage is the biggest financial commitment we make so it’s understandable that we want to know just how much we’re going to have to fork out each month. You never know what’s going to happen in the future, but at least if you’ve committed to a long-term fixed deal, you know where you are going to stand with your repayments. Borrowers need to be sure however that the deal they take out is right for them and that they understand the different types of mortgages available before signing up to anything.”
Out of the total 8.8 million Britons stating that they would like to fix their mortgage payments about two-thirds (65 per cent) claim that they want to know exactly what their monthly outgoings are. In doing so, many people could find that they are able to draw up budgets more effectively and pay off loans with greater ease. The study, in which more than one reason could have been selected, also indicated that about half of homeowners believe that the Bank of England will increase interest rates within the next two years. With such moves potentially placing pressure on many consumers’ finances, their ability to make repayments on mortgages, secured loans and other demands on their finances could decrease. Meanwhile, three per cent of those surveyed report that in the past they have been “stung” financially by a variable or tracker mortgage deal.
For people worried that a rise in the base rate will place further pressure on their spending, using the equity built up in a property to take out a secured loan could be an advisable way in which to relieve financial anxieties. Speaking earlier this year, Katie Tucker, product specialist for John Charcol, reported that remortgaging could see homeowners save hundreds of pounds on their monthly mortgage payments, especially for those consumers who are coming towards the end of fixed-rate or discounted deals. She added that such a move could also help consumers free up money to make home improvements.
Steve Smith writes for 1 stop finance shop where visitors can apply for cheap secured loans and also focuses on quick personal loans and poor credit loans for UK residents.
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