Variable Mortgage Rates Comparison
|
|
Comparison and analysis of the consumer safeguards of variable rate and renegotiable rate mortgage instruments … |
Variable Mortgage Rates Comparison
UK Mortgages Rate Myth Exploded
Low can mean high -
Let me reveal or explode the myth surrounding the mortgages rate. Almost everyone is possessed by the almighty mortgages rate but the lowest rate can cost you more than a higher rate. So low can mean high! How can that possibly be?
Associated costs -
If only life in the mortgage industry was as simple as life outside the industry then perhaps you wouldn’t be reading this helpful article. There are a number of things that can affect the actual cost you pay by way of the mortgages rate; we’ll call these associated costs.
The devil is in the detail -
Most people, quite rightly are attracted by the current low mortgages rate. However, the detail that states, “In addition to……” Every single mortgage lender, notice I said EVERY (meaning 100%) has associated mortgage set up costs. If you add up these individual costs and then calculate the real interest rate it will almost certainly not be as attractive as you think.
The easy way to calculate -
Okay so we are not all mathematicians and the mortgages rate fixers rely upon this to dupe you. But I’ll show you an easy way to establish whether or not you are getting a good deal.
Compare apples with apples -
If you want to compare one mortgages rate deal with another this is what you do. You must first compare one fixed rate deal with another fixed rate deal. Compare a tracker with a tracker and a SVR (Standard Variable Rate)
The term -
The term in the mortgage industry is the length (duration) of the mortgage payback period. In the past the norm was 25 years (depending on age) but nowadays they have moved the goal posts to 30 years because rising house prices mean bigger loans. When comparing mortgage quotes you MUST compare the same term.
The bottom line -
This is what you have been waiting for. In business terms they call it the “bottom line” to you and me it means “how much is it?” All you do to see if you are getting the best deal is look at the bottom line to see what your monthly mortgage payments are. Do two calculations; multiply the monthly payment by the “term”. Then add that to the “associated” costs.
Insignificant mortgages rate -
To do a “lowest cost” comparison look at the sum of the two simple calculations. Compare this figure with each quotation you might have. You might well see that the mortgages rate is insignificant as all you should be interested in is, “How much is it?”
About the Author
How would you like to discover insider knowledge of just what exactly the mortgages rate means to you? You can grab my free e-book called the Mortgage Bible that could save you thousands over the course of your mortgage. You’d be crazy not to!
interest rates/APR (mortgages)?
when looking for Current Mortgage Interest Rates (fixed rate for 2 years) i have seen that most offer an initial offer, a follow on rate and an overall cost for comparison.
An example of this is;
initial offer – 5.19%
follow on rate – 7.44% variable
overall cost for comparison – 7.4% APR
could someone explain to me what this jargon means? What is the interest rate on the loan? is it the APR rate? I am aware that APR is the annual percentage rate but would you be paying the 5% interest rate for the first 2 years then the higher rate after that?
It means that you will be paying 5.19% for the first two years and then, based on current interest rates, 7.44% for the rest of the term of the mortgage but that you will need to pay whatever the going rate is at the time, which may be more or less than 7.44%. The 7.4% they mention is the average amount you will pay over the term of the mortgage based on today’s rates.
Don’t worry, after the 2 years is up you can change to another fixed rate.
|
|
Comparison and analysis of the consumer safeguards of variable rate and renegotiable rate mortgage instruments … |
