Consumer urged to be careful with eye catching mortgage deals
August 6, 2009
Industry experts have been urging consumers in the UK to be careful when going for mortgage deals that they think look too good to be true, as the chances are that they are too good to be true.
Many mortgage lenders are offering eye catching deals for consumers, but there are many catches and hidden fees tucked away in the small print. Often, by the time the consumer realises that the mortgage deal is not as great as originally thought, it is too late.
A couple of new mortgage loans that have hit the market recently have been slated by some industry officials, who have warned consumers to think twice before opting for those mortgage deals.
A new one year fixed was revealed a week ago by Nationwide, and this was at 3.59 percent and was for existing customer looking to switch deals. Another couple of mortgages were released by the same lender, but officials have warned that consumers should think carefully before committing to these deals.
Consumers are warned that homeowners that are coming to the end of any current deal could be worse off if they go for one of these new deals, as once the new deal ends they will then revert to the lender’s new standard variable rate of 3.99 percent.
For those that do not take one of the new deals they will revert to the old SVR of 2.5 percent, which also comes with the promise that it will never increase more than 2 percent above base rate.
One broker stated: “This one-year fixed rate is poor value for everyone, but it would be madness for anyone whose loan-to-value ratio is above 75 per cent to switch to it, bearing in mind the limited and expensive options likely to be available to them in a year’s time when they look for another deal.”
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