Uncovering These Hidden Extras In Your Next Mortgage
When you are considering a new mortgage, there are a number of charges that banks might not spell out as much as borrowers might like them to. They are always mentioned at some point and in the end may add up to quite a lot of cash. But mortgage tables in their basic form won’t spell them out. So when you are trying to compare today’s mortgage rates through online charts, don’t forget to delve more deeply to see what hidden fees you might unearth.
To understand what these fees are going to end up costing you, it is worth either asking an independent financial advisor for a model or at the very least get a list of what the total repayments will be, including all fees.
Here’s some examples of what you might want to be alert for when trawling through the mortgage tables in search of interest rates.
Exit Fees – if you do not maintain the mortgage to the end of its term and instead pay it off early then the bank may try to charge you an exit fee to cover their administration costs that are involved in closing the mortgage. This may even be charged at the end of the mortgage whether it is paid off early or not. Previously these have been reasonable fees that don’t really add up to much in comparison with the figures involved in a mortgage, but some banks have hiked up these fees to try to make more money. This is taking advantage of the small print saying that charges can be raised and can result in incredible rises.
Standard Variable Rate – this is the standard mortgage rate that the bank will charge you once your introductory period is up. It is usually about a couple of percentage points above the standard base rate. This is where the banks make their cash through those customers that don’t try to change mortgages when the introductory offer finishes. If you are on the standard variable rate and the tie in period is over, then it is high time to look at those remortgage charts.
Higher lending charge – gone are the days of the 125% mortgage, or at least until the banks forget how badly they had their fingers burnt this time around. Most of the remortgage charts show the best buy deals and have various hoops to jump through, such as not lending more than 75% of your new home’s value. If you are borrowing more than the cutoff, then the bank may charge you a higher lending charge.
Early redemption fees – if you want to end your mortgage earlier than the offer or tie in period, there is usually an early redemption fee. This might be displayed as an amount of cash or so many months’ interest. Quite often after the fixed or tracker rate ends there is a tie in period during which you cannot move from the standard variable rate without incurring this early redemption fee.
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Posted by Carlos Sagastume on December 22, 2008. Filed under HUD Homes.
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