Should I change mortgages?

Q I took out a ?50,000 repayment mortgage with Woolwich in 1998. Since then I have paid ?375 every month, although I did fall into arrears of about four months last year, due in part to erratic income.

All payments are now up to date but I think that my monthly payments might be too high. Although I am on a variable rate the amount I pay never changes. I recently called the mortgage helpline and was told that if I signed a deed of variation to a fixed rate of 3.99% for two years, my payments would drop to ?301.

What is a deed of variation and should I have been paying this amount all along?

MM

A A deed of variation is simply a document which allows the lender to alter the terms and conditions of your existing loan - if you are changing your mortgage but not your lender, it's basically just the form you have to complete in order to remortgage with your existing lender.

That's all you are being offered here - a remortgage. Moving to the fixed rate of 3.99%, which is lower than your current variable rate, accounts for the lower repayments of ?301. You don't say whether you were originally on a fixed rate and have now moved on to a variable rate, so I can't tell whether you have been paying over the odds at any point.

As this offer from Woolwich is just a remortgage offer, you might want to consult a mortgage broker to see if he or she can find you a better deal - you're not obliged to stay with Woolwich and your past arrears shouldn't be much of an obstacle, especially as you've already brought your payments up to date.