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Summary:
A “lifetime” tracker mortgage versus a two year discount mortgage. Here we make the comparison.
Author: Dot Piper
Once upon a time, people used to organise a mortgage, often
through the estate agent who'd sold them the property and generally remained faithful to that building society throughout the term of the mortgage. Back in the 1970's it was quite usual for couples to save up for their deposit with a particular building society in order to be looked on favourably when the time came to apply for a loan. The only time they'd have cause to change things was if they moved house and then they only tended to arrange a replacement mortgage with the same company.
Things have certainly changed since then. There are a great many more building societies all competing for your business. It has become the norm to switch between building societies on a regular basis in order to gain the best possible rates. It's very much easier now. Specialist on-line brokers can offer all the help and choice that you need and it's no longer the mystifying process it used to be.
There are an unbelievable number of mortgages available and flat rate “lifetime” loans are now becoming available at lower rates. Are they really going to save you money in the long term though?
As an example, we have details of a lifetime tracker mortgage from the Woolwich. Based on an interest charge which is guaranteed to remain at 0.19 percentage points over the Bank of England's base rate, which means a current rate of 4.69 per cent. There is no need to change after two years; the rate will automatically adjust according to bank rate.
Compare this with an offer from the Portman Building Society. They offer a two year discount mortgage. Their rate is 4.19 per cent.
Click here for part 2
Did you Know?
Over recent years, the cost of moving house has risen at more than twice the rate of house price inflation. The main offender has been stamp duty.
Today, a move from the average semi worth £174,750 to an average detached house costing £293,250, will cost some £12,500. Five years ago the same move would have cost just £4,500. These costs include Land Registry costs, local authority searches, estate agents, solicitor's fees, and of course, stamp duty. This means that house moving costs have increased by 176% whilst house prices have themselves risen by 70%.
This increase in home move costs has been greatly influenced by the fact that the average price for a detached house has now burst through the £250,000 level above which stamp duty jumps from 1% to 3%.
For some homeowners, these costs have influenced a decision to stay put and remortgage. That's one of the reasons why remortgages have become so popular.
Did you know?
There can be a price differences between car insurance quotes by as much as 50%. That means it really pays to shop around. And don't forget, when it comes to renewal time shop around again! Don't automatically accept a renewal notice!
Did you Know?
If you smoke, the cost of your life insurance will be about double. And it's no use just giving it up a few weeks or months before you apply. Most life assurance companies say you mustn't have smoked for a least 12 months prior to the application – and some insurers extend this to 5 years!
Did you know?
Last year the average Contents Insurance premium rose by 2% to £151 and the average Buildings Insurance premium increased by 1% to just over £205. But within the market we've seen rises of as much as 6%.That's why if you want cheap home insurance , it pays to get a range of quotes off the Internet – and never accept the first quotation you get.
Did you Know?
According to Land Registry figures, there has been a huge increase in the number homes sold for £1m plus. Despite what you'd expect, this hasn't caused the scramble for business you'd expect from lenders. Many of them are exercising caution when it comes to the well-heeled mortgage seeker. Surprisingly, the best deals go to the smaller borrower. It seem as if lenders would prefer to lend 10 borrowers £150,000 each rather than one loan of £1.5m, in order to spread the risk.
It is, however, beginning to get easier to get mortgage quotes for high value homes. Recent figures from the Land Registry show a massive increase in the sales of million pound plus properties.
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