Snap up a bargain while you can

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The mortgage price war that has raged on the high streets in the last couple of years is finally showing signs of abating. Interest rates are slowly rising as the housing market picks up, and the uncertainty generated by the election is encouraging more and more borrowers to snap up the best deals while they are still available.

Fixed-rate mortgages are being withdrawn and replaced by slightly higher rates, while the increased activity in the market place means that lenders are having to provide fewer incentives to attract borrowers.

That doesn't mean that good deals can't be found - as our table shows, there still remain plenty of offers to tempt borrowers - but shopping around and checking the small print have never been more important. And if you are looking to find the best deal, it will be well worth considering the telephone lenders as well as the traditional high street, particularly for a variable rate.

However, most commentators advise fixing your mortgage at present, and this means not only finding the keenest rate, but checking for any redemption penalties - a charge if you switch mortgage lenders - and for any other restrictions. This is one area where the lowest rate does not automatically represent the best deal. Sometimes these restrictions extend beyond the period for which the rate is fixed, so it does pay to read the small print - particularly if you move house frequently.

It's still a good time to get a mortgage deal, but you do need to keep an eye on the market, because lenders are introducing new products or new terms every week. There may be better incentives, such as payment of legal fees or valuations, or the package may include free accident, sickness and unemployment insurance, which could prove more attractive than slightly lower rates.

If you are unsure about fixing your mortgage for a length of time, it may be worth taking advantage of one of the many mortgages that start with lower rates or discounts for between one and five years. This will save you money in the early years compared with the standard variable rate - but your repayments will rise in later years.

Again, you should check the terms carefully. There may be penalties involved if you need to get out of the deal - whether to move and have a new loan from elsewhere, or simply to remortgage on better terms - before the lender has recovered the cost of the initial discount n

Simon Read

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