Now faced with a tougher market, lenders are always on the look out on how to make some extra case from mortgage borrowers. There are typically four hidden catches that mortgage providers often forget to mention in the original agreement. These four catches and things that you should look out for are:
Exit Fees – If as a customer you switch to another lending company to pay off your mortgage, some firms will try and charge you an exit fee to cover any administration costs that may be involved. In the past these fees usually add up to an amount between the figures of £50 to £100, but some lenders will try and take advantage of the small print which states that fees are variable and so could allow them to raise the price to as much as £200+. Some experts have said it is possible to get away with not paying the fees if you complain to the lender. However, it does not always work.
Standard Variable Rate – The standard variable rate is the lender's ever changing rate. The rate is normally around 2% higher than that of the Bank of England’s base rate and it is the default rate that customers will be put on when their current deals have expired. Lenders make money through this rate when borrowers do not move to a better deal elsewhere. The general advice is if you are paying a standard variable rate – remortgage
as soon as you can.
Higher lending charge – With prices of things rising, borrowers have to stretch themselves and now affordability measures are allowing them to increase the amounts that they will lend. However, some of these ‘best buy’ deals will come with a higher lending charge, making the ‘best buy’ deal not so good after all with new charges included. Make sure you check the small print on any mortgage deal you are offered.
Early redemption charges – With a lot of fixed rate or tracker deals there will be an early repayment charge, this is there to ensure that the borrower sticks to the length stated in the initial deal. With any mortgage check what the early redemption charges are and work out how much it will cost you to remortgage. Even if you are planning to stick with the same deal all of the way through, check what it would be in case circumstances were to change.
