Is a Fee-Free Mortgage as Good as It Sounds?
The number of fee-free mortgages being offered by lenders is increasing in a bid to get more borrowers. According to Moneyfacts approximately 40% of the available deals on mortgages in July this year came without any fees.
Is there a catch?
A fee-free mortgage is very enticing but before you go full steam ahead, it is important to stop and look at the numbers. It could be, that paying no arrangement fees mean that you could be paying a higher interest rate. You may find that paying an upfront fee means you are better off in the long-run.
For example, Sainsbury’s Bank offers a two-year fixed rate of 1.92% with no fee, available up to 60% loan-to-value. A £150,000 mortgage repayable over 25 years would cost £630 a month – that’s £15,120 over two years. Nationwide has a two-year fix at 1.54% with a £999 fee and £500 cashback. The total two-year cost comes to £14,971, £149 less than the Sainsbury’s Bank deal.
How do I know the mortgages I am eligible for?
Understanding all of the different mortgage products can feel overwhelming, that’s why we have a guide to help you understand the different types of mortgages available.
To know the amount, you can borrow and for how long is very much dependent on your personal circumstances. With so many lenders and mortgage products available and what the criteria each work too is very tricky to negotiate on your own. As a mortgage broker, we have access to the latest offers and deals and understand the criteria, so we can match you to the right mortgage for your circumstances.
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