The best deals if you must have a mortgage

The average UK property now costs a staggering 9.6 times the average salary, says the FT, which means that many of those who have bought a house in recent years are sitting on monster mortgages. Thousands are in for a nasty shock if they have to remortgage before Christmas as lenders pass on the five interest-rate rises since August 2006. Worse still, the recent credit crunch has seen a swathe of the more attractive mortgage products whipped off the shelves by lenders.

Moneyfacts.co.uk reports that the total number of mortgage products available has fallen by 40% over the last three months, with a drop of 16%, even for customers with good credit ratings. It's also becoming harder to borrow, with a 60% rise in the number of rejections in the past six months. As a result, the best deals are being snapped up faster than discounted Wedgwood at a Harrods sale for example, the latest Dunfermline 5.29% two-year fixed deal sold out after only four days.

So, what's anyone seeking a mortgage to do in the current climate? First, some good news. While rates are higher overall than for some years, a quirk in the market right now is worth exploiting fixed and variable rates are virtually the same. Normally, fixed rates are higher (as they create more risk for the lender should their own funding costs linked to the base rate rise during the loan period). This won't last, so if your current fixed-rate is close to expiry, and you want to get hold of another, you should act now. Use a comparison site, such as Moneysupermarket.com best buys change weekly at the moment and then move fast to secure a deal. But there are a few traps to watch out for. As well as a low interest rate, watch out for arrangement fees, which have leaped in recent years. Lisa Taylor at Moneyfacts.co.uk says fees are averaging "around £700 to £800" just now, but "fees close to £1,000 are reasonable". However, lenders such as Halifax and Alliance & Leicester charge as much as £1,999 on low-rate fixes. Better value are Abbey, the Woolwich, or Britannia two-year products all offer sub-6% rates and a fee of just under £1,000. Alternatively, you could fix for a longer period Giraffe, part of the Bank of Ireland, has a three-year fix at 5.68%. It's not the best interest rate, but it comes with no arrangement or legal fees and it means you're getting an extra year before you have to remortgage again.

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Lastly, check the small print and beware of what Thisismoney.co.uk calls the "date trap". Current offenders include Bristol & West, whose two-year' deal actually only runs to 31 August 2009, and Coventry Building Society, whose five-year deal is fixed until 30 September 2012. Abbey plays fairer with a two-year 5.58% fix that ends in February 2010.