Being in a fix gives us peace of mind

Helen and Kevin Bowdery remortgaged last September even though they were trapped in their existing loan by 'overhanging' redemption penalties.

The couple had taken out a £99,000 fixed-rate loan from Cheltenham & Gloucester, but when the fixed period ended they found themselves locked into C&G's standard variable rate - then 6.35 per cent - by redemption penalties for a further three years.

Helen says: 'We decided to leave it a year, but my husband was coming home from work saying his colleague had got a fantastic mortgage deal. Then I saw an ad for London & Country mortgage brokers and called them.'

The Bowderys not only wanted another cheap fixed rate, they also wanted the option of overpaying their mortgage every month to reduce the amount they owed more quickly.

London & Country identified a flexible loan from Britannic Money, fixed for two years at 5.35 per cent. Interest on Britannic loans is calculated daily, so the Bowderys would benefit immediately from any overpayment.

It had no early redemption penalties even during the fixed period; there was no arrangement fee; and the legal work was free of charge. Although there was a valuation fee, Britannic gave the Bowderys £150 cashback on completion. Their payments dropped from £709 a month with C&G to £641 with Britannic.

However, there was one bad problem. The solicitor appointed by Britannic completed the transaction at the beginning of September, rather than the last day of August as requested. This meant the couple had to make two mortgage payments in one month. 'The solicitors said they hadn't received the settlement figure from C&G,' says Helen.

Remortgagers should be able to avoid this by specifying that they want to complete at the end of the month. If the chosen date is missed, it is cheaper to wait another four weeks rather than complete at the start of the new month.

Helen realises that if they had waited a few more months, they could have secured an even lower interest rate, but says: 'The mortgage is still competitive, and we think rates will go up fairly soon. The fixed rate gives us peace of mind - we know we can afford to carry on overpaying even if rates go up.'