So do you cover your monthly spend on the mortgage or take the risk that interest rates will drop and on a variable you’ll be quids in?

It seems that some lenders are happy to offer deals that appear too good to be true and they usually are. A fixed rate mortgage maintains a set interest rate during the period of the loan. For many people with regular incomes, this is a definite benefit as there are no hidden charges.

You are also able to make extra payments throughout the year to make the principal shrink quicker. By making just a few of these payments each year we discovered that a number of years could be taken off the mortgage term.

In the long term, this is a strategy well worth pursuing if you are able.

Northern Rock has revealed the enhanced competitiveness of its product range has seen mortgage applications jump by 70% in March, with the average loan to value of new lending just 48%.

The nationalised bank has published its trading statement for the first quarter, confirming gross mortgage lending for the first quarter was just £550m, with this representing mortgage completions in the period and not yet reflecting the impact of the planned increases in mortgage lending.

Mortgage redemption rates have slowed significantly, and are running at around half the average rate of 2008. The bank said its debt management strategies are beginning to pay off, with its stock of unsold repossessed properties falling from 3,620 in December 2008 to 3,200 at the end of March.

However, residential arrears over three months have increased to 3.67% from 2.92% in December. Northern Rock said it had noted tentative signs of improvement in early arrears trends, reflecting the investment in its debt management capability and improved affordability levels as a result of falling interest rates.

Gary Hoffman, chief executive at Northern Rock, said: “We are implementing our new business plan, which will enable us to move forward with our lending programme. The revised state aid application has been submitted and we are making good progress with the legal and capital restructuring of the business – which we expect to complete in the second half of the year.

“The economic environment remains difficult but our trading performance in the quarter was in line with our expectations and we saw some early signs of mortgage applications increasing in March, reflecting pricing adjustments to our current product range.”

Source:  Your Mortgage UK