Headline mortgage rates misleading borrowers | moneyfacts.co.uk

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Lieke Braadbaart

Online Writer
Published: 02/02/2018
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The mortgages with the lowest rates are not always the cheapest overall, research has revealed, as low-rate mortgages could be costing borrowers thousands of pounds more than deals with higher headline rates.

This is according to the latest Mortgage Saver Review from Trussle, which calls for an industry-wide introduction of a 'true cost' metric that takes into account of extra fees and incentives. Here at Moneyfacts, we always prominently display the APRC (annual percentage rate of change) on our mortgage Best Buy charts, which takes into account not just interest rates but also mortgage fees. We would welcome this becoming an industry-wide practice.

Trussle took a close look at mortgages with a loan-to-value (LTV) of 60% and found that over a period of two years, the lowest rate mortgage would cost an average of almost £1,000 more than the lowest deal without fees. Similarly, over five years the lowest deal without fees would almost £1,300 less, and even deals offering the same rates could vary wildly in their 'true cost'.

Many mortgage borrowers would love to have more, clearer information, as additional figures show that only 30% understood all the information their lender presented to them, and 9% even felt that advertised deals were actually hiding important information. And with just 44% taking upfront costs into account when choosing a deal, it's no surprise that 75% would support rolling all charges and incentives into one true cost figure that all providers use to advertise their deals.

Clearly, transparency is important, especially when making such a big decision as which mortgage to tie yourself to for the foreseeable future. The mortgage Best Buy charts are sorted by APRC as default, so you can be sure that the deal at the top of the chart is the one with the lowest rates and fees for the term or mortgage type you are interested in.

You can even use our mortgage calculator to find the deal with the lowest APRC based on your specific mortgage requirements. And the representative example at the bottom of each deal (which can also be found in the 'Details' on the Best Buys) tells you the cost in pounds, so you don't have to rely only on percentages to make your choice.


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