25-year fixed deals 'more expensive'

Posted: 10 Feb 2009 08:28:50 GMT

Homeowners who took prime minister Gordon Brown's advice two years ago and fixed their mortgages for 25 years will now be paying the price, financial comparison website moneysupermarket.com has said.

The average cost of such a fixed deal would be 5.98 per cent, moneysupermarket.com's head of mortgages, Louise Cuming, said.

While this can be described as a good deal, historically speaking, the current situation in which the cost of living is rising and savings rates are falling means that the monthly mortgage payments on such a rate will feel particularly high.

"Many of those people who listened to Gordon Brown must be crying into their porridge each morning," Ms Cuming said.

"It underlines the danger of locking yourself in so long into the future. Not even Mystic Meg has a mortgage crystal ball."

Homeowners do have the option to downsize, however, which will allow them the opportunity to not only take advantage of lower house prices but also lower interest rates on a new mortgage.

Those choosing to do so may find that homes sold online are cheaper than those from an estate agent, as expensive middle men can be cut out of the buying process.



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