C&G launches mortgage calculators to help consumers save and beat the house price falls

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Cheltenham & Gloucester, a member of the Lloyds Banking Group, has introduced a range of online mortgage calculators as a comprehensive solution to help banking customers understand their mortgage savings better and to beat the house price decline.

Cheltenham & Gloucester, a member of the Lloyds Banking Group, has introduced a range of online mortgage calculators as a comprehensive solution to help banking customers understand their mortgage savings better and to beat the house price decline.

That bright light ahead isn't all the sun. It's partly the beam from the smiles of tens of thousands of borrowers who are benefiting from the current 0.5 per cent Bank of England base rate.

Homeowners with tracker mortgages taken out two years ago are probably enjoying the low monthly payments, while many lenders have set their standard variable rates (SVR) at 3 per- cent - lower than many fixed-rate deals on the market.

However, what borrowers might want to contemplate is whether they should fix their rate now and pay a little more, or wait. With fixed rates unlikely to drop any lower, waiting may see them miss out on more cost-effective deals.

With the current fragility of the financial climate, it's important to spend time researching and thinking about solutions for the long term, and this is where a mortgage calculator can help.

C&G has developed a range of easy-to-use calculators that can help with financial planning, so homeowners can make better-informed decisions.

The housing market has seen property values fall dramatically, resulting in a loan-to-value (LTV) increase. According to Lloyds Banking Group, a drop in house prices of 6 per cent over just six months would put a borrower who has 75 per cent LTV on a loan size of £187,500 in the 90 per cent LTV bracket.

Their monthly payment would be reduced to £1,039.87 with an SVR at 3 per cent; but, to stay at 75 per cent LTV, they would have to pay around £2,100. Take into consideration that a low LTV is seen as below 80 per cent and the situation becomes clear.

Using a mortgage calculator to find a good deal on a fixed mortgage could ultimately result in saving a lot more in the future.

Stephen Noakes, Commercial Director at Cheltenham & Gloucester, believes we are more or less at the bottom of the market for mortgages, so there is no better time to fix. He says the average rate over the past 10 years is 5.84 per cent, so longer-term fixes under this level are very good value.

Tracker mortgages will always be attractive to homeowners looking to take advantage of falling rates, but look a little closer. Although it appears that this will result in higher payments initially, the peace of mind that can be gained from a fixed rate could be worth a whole lot more.

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Eleanor Ross
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