Fergus Muirhead answers your consumer questions
I'm Fergus Muirhead and I'm here to answer any questions you may have about any money or consumer issues.
I'll be dealing with a selection of your queries every other Wednesday on Scotland Live, on Reporting Scotland and here on the BBC Scotland news website.
Please drop me a line here at firstname.lastname@example.org with your questions.
You can also read more on money and consumer issues on my own blog.
Q. My mortgage has run out for about four months now and I just don't know what to do. My current rate is the RBS standard rate 4.9%. I am a Royalties Gold account holder with RBS and I don't know if I should go for fixed or tracker? Should I tie into a fixed rate now as the rate is so low or should I go tracker as this rate will stay low for years to come? My mortgage loan is in the 80% bracket, please advise. Keith JG Houghton.
A. This is a really good question and gets to the heart of the issues that are facing tens of thousands of borrowers at the moment. In one sense there is no right or wrong answer. You have a choice of several different mortgage products, some of which will be less expensive on a monthly basis than others right now, but they will all increase in cost at some as yet undefined point in the future. You ask if you should go with a tracker rate because they will stay low for years to come but of course that will only hold true if the base rate stays low, and there is a lot of debate at the moment about when and by how much we are likely to see rates rising this year. I think that fixed rates are great if you want to maintain control of your expenditure for the foreseeable future. If you have a bit of flexibility in your monthly budget however and are prepared to pay more for mortgage costs in some months than others then you might benefit from playing the system and sticking to a tracker for now. Not that any of that should be taken as advice in your particular situation. I think that it's only possible to give the advice that you ask for when your full financial situation is known and I would suggest that you sit down with an independent mortgage broker and discuss your current situation before making a decision.
Q. My wife and I are both retired (65 and 69 respectively) senior citizens. Our property has recently been valued at £330,000, with an interest only mortgage of £75k and other debts of £15k. The current mortgage agreement expires in September 2016. We also have savings of £65,000. We have sufficient joint income to support a reasonable retirement lifestyle, but insufficient income to increase our savings pot. We are settled where we are and ideally don't want to move out of our current home. In consideration of the above and looking forward to autumn 2016 please advise.
A. Can I answer your second question first? If you have sufficient income I presume that you do not need to dip into your savings to live month to month and so I can't see any need, based on the information you have provided, to think about either downsizing or releasing equity from your property at the moment. That is not to say that it won't become a sensible option at some point in the future so don't rule it out completely, but I don't think it's necessary at the moment. As far as your first question is concerned I don't know whether you will be able to extend your existing mortgage because I don't know which lender you are using and each lender has its own set of rules, so the starting point would be to talk to your lender. In general I think it should be possible to find someone that will do what you ask but you may need to speak to some sort of specialist broker who has access to a range of different companies. If your income is sufficient to meet your current expenditure why not use your existing savings to repay the bulk of your mortgage? I know that will leave you little by way of savings but as I suggested above you could get it back at some point in the future if you really needed the money. And the chances are that you will be paying more in mortgage interest than you will be earning on your savings in the bank. I know it's difficult psychologically to leave yourself with little in the way of savings but it is an option worth considering.
Q. I am a 67-year-old widow on a decent private pension. I am about to add a garden room onto my home, which I have been saving for, but should I need an extra £6,000 for furnishings, which is the best way to borrow that amount, which I could easily pay back within 12 months? Kay Cormack.
A. The simplest, and cheapest, and I hope you don't think cheekiest answer would be to wait until you have the money and buy the furniture then. You wouldn't have to borrow anything since you would be able to pay cash just as you have done with the extension. If you need the furniture now, the best thing to do would be to have a wander round the shops to see who is offering interest-free credit, or some buy now and pay in 12 months deals. That way you could have your furniture now and not have to pay for it until you had the money - and at no extra cost if the deal you sort out is interest free. But make sure that you keep a note of when you need to make full payment otherwise you might find interest being added on from the date of purchase. If you can't find any deals like that in the shops you want to use then you could approach your bank and explain what you want to do and ask them if they can lend - either by way of an overdraft or a personal loan. The overdraft would probably be cheaper but your bank might be happier with a personal loan over 12 months. Another alternative would be to find a credit card that is offering 0% interest for 12 months and that would be willing to give you a £6,000 credit limit and use that to buy the furniture, again making sure that you paid off any balance before interest kicks in.