Mortgages. More to pay than just the interest

Summary

People are attracted to mortgages because of their low interest rates, but mortgage companies are making their real money with all their extra charges. This article takes a look at what's really going on.

Author: Anna Richardson

It's become a popular practice in the last few years to remortgage every

You may see an amazing deal for just 4.5% for a two year fixed mortgage. But what other charges will they add on? You can be that the small print contains a number of references to add-on charges, and you have to make sure you're aware of these before you sign up, because it could make the remortgage not such a good deal after all.

These changes are a result of the remortgaging trend, and are the lenders' answer to the increasing popularity of the ‘rate tart'. The industry isn't too keen on the people that shop around looking for better deals, but for some reason, they're only too happy to receive the ‘tarts' with open arms if they come looking to them for new business! It would seem that the remortgaging industry is big business indeed, with 1.1 million deciding to remortgage in 2005 alone – that's £117 billion worth of equity that changed hands.

We were surprised to see that some lenders were penalising remortgagers by as much as £1000 – and that was to move to a different mortgage within the same company!

There are a number of charges that the mortgage lenders feel justified to make – administration charges for example, charging customers for a telephone call or letter. One company's small print reveals that a photocopy will cost £35 – rather expensive we're sure you'll agree! The bigger charges include the valuation fees, early redemption penalties (for paying off early) and exit fees (a charge for leaving your current mortgage).

Click here for page 2

Did you Know?
Early methods of transferring or distributing insurance risk were practiced by Chinese and Babylonian traders as long ago as the 2 nd and 3rd millennia BC. Chinese merchants traveling treacherous rivers would redistribute their stock across many boats to limit the loss due to any single boat sinking. The Babylonians devised a system which was recorded in the Code of Hammurabi, circa 1750 BC and was used by early Mediterranean sea traders. If a trader received a loan to fund his shipment, he paid the lender an extra sum in exchange for a guarantee that the lender would cancel the loan should the shipment be accidentally destroyed or stolen.

Did you know?
A survey conducted by Experian the credit reference agency, found that 54% of loan applicants for were refused whilst 43% were offered a loan but at a higher rate than that advertised. That's why, if you're searching for cheap loans , it's usually best to go through a loan broker who will know the lenders who will suit your circumstances.

Today's Tip
If you get a life insurance quote from your bank or even direct from a Life Insurance Company, you'll probably find it's very expensive. The cheapest quotes are normally available through an online life insurance broker. These specialist brokers search the market for you - so you're almost certain to get a much cheaper quotation.

Did you Know?
The concept of medical insurance was proposed in 1694 by Hugh Chamberlen. In the late 19th century, early medical insurance was actually disability insurance, in the sense that it only covered the cost of emergency care for injuries that could lead to disability. This insurance model continued until the early 20th century when patients were expected to pay all other health care costs out of their own pocket under what is known as the fee-for-service business model. Modern medical insurance programs emerged mostly after the 2 nd World War.