How to Get the Cheapest Mortgage Deal
The Redemption Penalty and Mortgage Fees Increase Mortgage Repayments
Apr 12, 2009
Signing up to the cheapest mortgage deal means that a homeowner has achieved the objective of minimising mortgage repayments. Securing the cheapest mortgage deal sounds easy, but the market is complex and holds a number of perils for both first-time buyers and savvy, experienced homeowners alike.
The Perils of Achieving the Cheapest Mortgage Deal
The early redemption penalty, mortgage fees, legal formalities and a whole range of different mortgage products mean that there is considerable scope for making costly financial mistakes. Consequently, many inexperienced first-time buyers, self-employed people and adverse credit customers turn to mortgage brokers to find the cheapest mortgage deal and minimise mortgage repayments.
Avoid the Early Redemption Penalty
Whilst every homeowner is desperate to escape a costly fixed-rate mortgage when interest rates are falling, this is not a good way to secure the cheapest mortgage deal. The majority of mortgage products tie in homeowners; leaving before the end of the mortgage term will result in a substantial early redemption penalty. This sum is added to the outstanding mortgage. An early redemption penalty will not only increase the term of the loan, it also increases mortgage repayments.
Minimise Mortgage Fees
Whilst homeowners can't escape mortgage fees, certain lenders will help with these costs as part of a mortgage deal. Avoiding a costly early redemption penalty and mortgage fees can be just as important as reducing mortgage repayments. Incidentally, homeowners who have earlier been charged a mortgage exit fee may be able to claim this back from the lender.
Do Mortgage Brokers Reduce Mortgage Repayments?
The volume of mortgage products available means that many homeowners with adverse credit turn to mortgage brokers to identify the cheapest mortgage deal. Be aware that mortgage brokers normally charge 1 per cent of the loan value as a mortgage fee. Many homeowners will be able to fulfill the function of the professional by using an online mortgage comparison service.
Securing the Cheapest Mortgage Deal for Adverse Credit Customers
Adverse credit means that homeowners will be choosing from a reduced range of mortgage products. It also means that mortgage repayments will be higher due to the risk posed to the lender. The cheapest mortgage deal may be the one already in-place if the adverse credit problem occurred after the mortgage was signed up to. Paying standard variable rate is likely to be cheaper than getting a new adverse credit mortgage, although this can be quickly validated with the services of a mortgage broker.
In these difficult times, finding the cheapest mortgage deal is crucial. Homeowners with an adverse credit rating should use the services of a mortgage broker to reduce mortgage repayments. Avoid incurring a costly redemption penalty to escape a fixed-rate mortgage. Always check to see if there are any offers available that help with mortgage fees and up-front payments.
Homeowners who are seeking the cheapest mortgage deal may wish to read about tracker mortgages, fixed-rate mortgages and discount rate mortgages.
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