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Mortgage in Principle

Just how cost effective is that enticingly low mortgage rate?

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Mortgage Calculation

It’s true – mortgage rates have never been so low and there are some great deals to be had – however don’t be enticed into signing up for the lowest rate without taking everything into consideration. When assessing the true cost effectiveness of a mortgage product, it is a common mistake to only take into account the effect that a lower APR % has on the monthly mortgage cost.

Remember each lender is free to apply a range of different charges in relation to Application/Booking Fees, Survey/Legal Costs and Cash Back incentives.  To that end the true cost of a two year fixed rate product can be assessed by multiplying the monthly mortgage payment amount by the 24 months that you will be contractually obliged to the lender and then by adding to this amount the total initial cost of setting up the mortgage and subtracting from this figure any element of Cash Back the lender is offering.

A 2 year fixed rate – calculating the total cost;

24 x the monthly mortgage payment amount + all additional lender fees = the total cost of the mortgage over 2 years.

If we calculate the total cost all of the mortgage products in this way and then compare them, we can easily which product is the most cost effective and that’s not always the one that’s enticed you with a low rate.

Ask About Mortgages is a ‘whole of market’mortgage broker with access to the 1000’s of different products available through a panel of over 80 different banks, building societies and specialist lenders. We can compare the ‘whole of the market’ for you.

Your home maybe repossessed if you do not keep up the repayments on your mortgage.