Timely advice on managing your mortgage

THE Consumers' Association of Ireland (CAI) has warned mortgage holders that they should not expect their lender to manage their mortgages. The group issued the advice because of the possibility of an interest rates rise. Consumers were told "It is up to you to act. Lenders are focused on new sales and not past sales," they said.

If they wish to fix their mortgage rate, variable rate mortgage holders should be able to instruct their lender by fax to do so. Instructions should be dated and recorded in writing.

"Beware of differential pricing against you. Double check, for example, with another branch, that the fixed rates offered to you as an existing customer are not higher than those on offer to new customers. Ensure that you get the best deal." At the moment most fixed rates on offer remain well above variable rates.

The group warned consumers that at a time of low inflation and falling tax relief, the real cost of borrowing is quite high. Consequently, accelerated capital repayments make a lot of sense.

This is where the mortgage holder increases his or her monthly payment, or pays in ad-hoc lump sums.

"However, remember that fixed rate mortgages beyond one year have redemption penalties. Discuss this fully with your lender before fixing your rate."

Mortgage holders should explore the possibility of fixing part of their interest rate and leaving the rest variable. This would allow them attack the variable part with accelerated capital payments.

Consumer Choice, the monthly magazine of CAI, is to publish a report in the near future on variable versus fixed interest rates.