The Mortgage Clinic: 'How long can we hold out for the best deal?'

Our current two-year fixed deal runs out on 5 December but, with many mortgage rates seemingly dropping fast, what's the absolute latest we can apply for a remortgage? We really don't want to miss out on any rate cuts – obviously it's a risk they might rise again, but we're happy to take the chance. J Greenway, Nottingham

Having seen mortgage rates slide in the past few months, and with expectations of further falls, it's no surprise that homeowners facing a remortgage deadline are wondering how long to hold out.

The average two-year fix nudged 7.08 per cent in early July but has since slipped to 6.39 per cent thanks to lower rates from lenders such as Abbey, A&L and HSBC, according to data analyst website, Moneyfacts. "It's now the same average as before the credit crunch last summer," a spokesman said.

On Friday, Nationwide announced cuts of up to 0.3 per cent, while Yorkshire building society reduced its fixes by up to 0.5 per cent; the latter's best two-year fix for an LTV of 90 per cent is now 5.89 per cent, with a £495 fee.

Under the circumstances, it's no surprise that your predicament is shared by other readers, and one landing ever more frequently in Mortgage Clinic's in-tray.

The absolute latest recommended by mortgage specialists is one month before a deadline. "Typically, a remortgage isn't held up by the speed of obtaining an offer but the speed of getting an up-to-date redemption certificate from your lender, and all the legal papers to be signed," says Andrew Montlake of broker Cobalt Capital. "But generally, you can apply for a mortgage up to about a month before."

Richard Morea, of London & Country, however, suggests waiting "no later than six to eight weeks". An awful lot depends on your circumstances, he says: "For example, if you and your partner have been in a steady job for years, it should be a swiftly resolved matter."

But if you're both newly self-employed with few financial records, it'll take a lot longer to find a lender who'll speedily process your application because of your higher perceived risk.

The danger, says Katie Tucker at Mortgage Force, is a stiff penalty if you don't complete before 5 December. "You'd be landed on the lender's standard variable rate, so your payment would likely be a few hundred pounds extra for each month you don't make complete the switch in time," she advises.

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One common tactic is to lock in to the most competitive rate, and switch to a cheaper one nearer the time. "However, you run the risk of paying fees upfront with a lender that you then ditch closer to your deadline, and can't then get them back."

Send us your questions and you could receive £50 to spend at Amazon

Foxed by jargon? Worried by the credit crunch? Email a question to mortgageclinic@independent.co.uk. We will not reveal your identity, and we cannot give specific advice. If your question is printed, you'll receive a £50 voucher from Amazon.co.uk, so you can kit out your home with anything from a lawnmower to an espresso machine. www.amazon.co.uk/homeandgarden