When you are considering a remortgage, there are a number of fees that lenders might not spell out as much as borrowers might like them to. They are always mentioned at some point and can eventually add up to quite a lot of cash. But remortgage tables in their basic form wont spell them out. So when you are trying to compare mortgage interest rates through online charts, remember to delve more deeply to see what hidden fees you might unearth in the small print.
To understand what these charges are going to end up costing you, it is worth either asking an independent financial advisor for assistance or at the very least get a model of what the total repayments will be, including all penalties.
Heres what you might want to be on the look out for when trawling through the mortgage tables in search of mortgage rates.
Exit Fees – if you do not keep the mortgage to the end of its term and instead pay it off early then the building society may try to charge you an exit penalty to cover their paperwork costs that are involved in ending 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 low charges that dont really add up to much in comparison with the figures involved in a mortgage, but some lenders have hiked up these charges 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 lender will charge you once your introductory period is up. It is normally about a couple of percentage points above the standard base rate. This is where the banks make their cash through those customers that dont try to remortgage when the introductory offer finishes. If you are on the standard variable rate and the tie in period has ended, then it is high time to look at those mortgage charts.
Higher lending charge – over 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 mortgage charts show the best buy deals and have various hoops to jump through, such as not borrowing more than 75% of your new homes value. If you are borrowing more than the cutoff limit, then the bank may impose 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 shown 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 change from the standard variable rate without incurring this early redemption charge.
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