Most panic at the range of offers and fall at the first hurdle seduced by tempting sales tactics and juicy offers. Richard Brown, chief executive of Moneynet.co.uk, urges buyers to beware of just this and walk on by the too good to be true deals.
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Instead Brown advises those thinking about switching their mortgage to a different lender to follow the five simple steps laid out below to avoid any nasty surprises further down the line:
· Dont be tempted by introductionary rates alone. Some lenders rely on ensnaring borrowers by offering a very attractive rate for an initial period, but these offers are very rarely the best long-term option. Understanding what happens at the end of any special rate period is crucial.
· Look beyond the interest rate and check what fees are payable. These could include arrangement, valuation, higher lending and legal fees. Many lenders have turned this into a very lucrative income stream and they are definitely something that can cancel out the savings you make by switching to the lower rate.
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· Mortgages that offer a lower rate if you take out building/contents cover at the same time can leave you paying higher premiums which cancel out the overall saving. Dont fall for them as they are just another way lenders can maximise their profit.
· Beware the cash-back temptation no one wants to give away free money. The offer might look attractive but there will no doubt be a higher interest rate to balance it out if opting for this, just make sure you can handle the repayments each month
· The cardinal rule is to avoid lenders PPI at all costs. The product itself is very important when taking out a mortgage, but it is equally important that you shop around and dont just grab at the first thing that comes your way stand alone providers offer far better deals.
Brown concludes: The only way consumers can be sure they have made the right choice is to do the maths. Amongst the myriad of products on the market, there will always be something to suit everyone. A small amount of homework to find the best one will bring more than a gold star as a reward.
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