A cheap rate mortgage or a higher rate with no costs?. Page 2

 

There's no doubt that whilst we've seen arrangement fees

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steadily increase, a number of ( secured loans ) lenders have used them to reduce headline interest rates. The Bank of Scotland being a recent example. Other lenders will even give you a choice - either pay a fee and have a low interest rate or fee free and pay a higher rate.

This means that it's essential to you find out which is the best option for you. If you ( Car insurance quotes ) expect to stay in the house for only a few years or you intend to re-mortgage as soon as any special offer rate runs out, you can afford to take a short-term view. In our experience, it's not always easy to get these calculations right, so we think it's best to use a mortgage broker to do the figures and then source the deal that's best for you. That way you'll avoid a potentially costly mistake.

Take the following basic example. Say you're looking at a 2 year interest only mortgage for £100,000 at an ( loans ) interest rate of 4.5%. That will cost you £4,500 a year. If the mortgage attracted an arrangement fee of £699 and the purchaser was expecting to re-mortgage after the interest deal expired in two years time, the mortgage will cost £9,669 over the two years. If the ( home insurance quotes ) alternative was an interest rate of 5% but without a fee, the two year cost would be £10,000. So in this case it's worth getting the 4.5% deal and paying the fee.

In our experience, you're likely to find that the bigger your mortgage ( pet insurance ) and the longer you are tied into the mortgage, the more important the interest rate will be rather than the fee.


Statutory Wealth Warning:
Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it. Security by way of a charge on your home may be required.

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