Beware the mortgage best before date trap by Finance News Bulletin

Published: 20/12/07

Borrowers could lose hundreds of pounds by signing up to a near to the ground rate mortgage deal with a 'skinny' end dateThe twilight Standard tries to draw a clearer picture of the UK property market: > Are house prices fallingLenders have been prearranged to repay unfair fees We have a full list of money owed

>> get back mortgage feesGet an idea of some of the best mortgage interest rates on the market with our tables >> Mortgage ratesThis is where, for example, a two-year fixedrate loan taken out nowadays would end in September 2009 - a month previous than expectedSeveral lenders are guilty of the practice, which foliage borrowers out of pocket unless they are alert enough to remortgage right away to a better set or discounted rateKatie Tucker, spokeswoman at mortgage broker John Charcol, says: 'Borrowers often overlook the precise end date of a special speed deal when selecting a mortgage

This can subsequently show costly if their mortgage transfers to the lender's standard changeable rate before they were expecting it'These days, mortgage arrangement cost on the best loan deals are steep,' she says 'If a borrower has to remortgage near the beginning because of a short end date they'll end up bearing cost, valuation costs and exit fees more often'Among the most horrible offenders is Bristol & West, owned by store of Ireland

Its two-year fixed rates sprint until August 31, 2009, already almost two months short If it takes the characteristic borrower up to a month to complete on a mortgage, it could denote they end up with the rate for just 21 monthsCoventry Building civilization has a five-year fixed deal at 609% with a £999 fee

But it is fixed only until September 30, 2012 And Newcastle structure Society has five-year fixed tax ending on September 30, 2009'Few lenders offer genuine two or five-year fixes because it means they are unrestricted and it is difficult to cost the risk,' says Melanie Bien, director at mortgage broker Savills confidential Finance 'Borrowers should be aware of these anomalies

'According to James yarn, mortgage broker at London & Country Mortgages, the average borrower could lose hundreds of pounds by choosing a mortgage deal with a thin end date For example, if a proprietor with a £100,000 mortgage applies tomorrow for a two-year fixed speed with Bristol & West at 589%, it is unlikely the contract will total before the end of next month But the fix has an finish date of August 31, 2009

This means that if the borrower reverts to paying the normal variable mortgage rate for three months after August 31, 2009, they will pay £355 more in sum than if they had signed up to a genuine two-year fasten Brokers say it is easy for homeowners to avoid the dangers linked with skinny finish dates by noting down the finish date of any mortgage dealHe says lenders contribution genuine two or five-year deals include Nationwide and Britannia structure societies Most generous is Abbey that has a two-year fix with an end day in February 2010

University researcher steal from Webster, 30, and partner Elly Rowell, 27, an English educator, recently took out a twoyear fixed rate with Nationwide at 568% to buy their first home in Southampton, HampshireThough they did not choose the deal based on it being a genuine two-year fasten, Rob says it is good to know they have set outgoings for 24 months'I was conscious I should be looking out for catches with mortgage deals, usually things such as hidden cost and charges or sheer redemption penalties,' says Rob

'So the fact there is no short end date on our contract is good information, too'Mortgage rates could fall early next year, according to experts, which will approach as a relief to tens of thousands of cash-strapped borrowers looking to remortgageInflation information published last week by the administration showed that CPI - the Government's aim measure for inflation - remained static at 18% in September

The Retail Prices Index measure of price rises, which includes mortgage payments, fell from 41% in imposing to 39% last monthThis is Money is packed with information, advice and tools that can assist you get ahead and save money

Martin Gahbauer, senior economist at Nationwide Building civilization, says he predicts a quarter percentage tip cut in the Bank of England base rate in February 2008 with a further slash in August This would take the base speed to 525% by this time next yearHe says: 'It would seem we are at the top of this interest rate cycle, though you can never say never

'While last week's price rises figures were encouraging, oil prices have inched higher This could denote there is further pressure on inflation in the tube'Experts say borrowers looking to remortgage should now seem at tracker or discounted variable rate deals This way, they can benefit if tax fall next day as predicted

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