We are often asked by our clients to find them the ‘cheapest rate’. Of course, we will always try to find the best value loan for anyone who comes to us. However, this will not always be the loan with the lowest ‘headline rate’.
Increasingly, lenders make money from charging high product fees for their deals. There are also numerous other charges, not always so well known about, that lenders will levy, and these must all be considered when sourcing a mortgage loan. The ‘headline rate’ can be misleading as it will not take in to account arrangement fees, application fees and exit fees.
The Telegraph, last week, has the following to say on this matter:
‘Telegraph Money reported on this discrepancy earlier this year, when research found that some “cheap” low-rate mortgages would cost borrowers £650 more in the long run than those with higher headline rates but lower fees.
This problem appears to have intensified over the course of the year: borrowers could now potentially pay almost £900 more than they need to, according to research by online mortgage broker Trussle.’
This is another major reason why we recommend that borrowers always seek advice before deciding on a mortgage deal. As part of our mortgage advice process at Clifford Davis, we will discuss the types of deals available and then look at the best value offering, taking in to account the rate, all fees and exist charges.
Do not be swayed by ‘headline rates’, good as many can be. Always remember that the lender must make money somehow and if they cannot do so on the loan itself, they will normally look to do so with their fees.
If you would like some more information about the other choices to be made when applying for a mortgage have a look at the mortgage section of our website or contact us to see how we can help.
