In recent times lenders have issued “comparable rates” with the intent of making it easier for consumers to compare loans. Whilst it has in some ways been effective it still doesn’t take into account fees charged by lenders upon entrance and exit fees once a mortgage is discharged.
Basic comparison rate charts don’t take into account these background costs. When comparing mortgages be sure to make yourself aware of all the fees and costs associated with the mortgage.
Be careful of deferred exit fees. Whilst many lenders have recently wiped these fees others haven’t and they will come into play, particularly if there is a chance that you may clear the mortgage or sell your property within 3 – 5 years.
4 Tips on comparing loans include:
- Compare interest rates
- Compare exit fees
- Compare costs and fees upon entrance to the mortgage including application fees
- Calculate the real costs over 3, 5 and 10 years (some exits fees don’t apply after 3 – 5 year periods.
Often you get what you pay for. Generally the lower the interest rate, the higher the fees – sometimes the loans are less flexible in terms of making extra repayments. Take your time, shop around and don’t always believe what you are told – look at the fine print.