To understand what these fees are going to end up costing you, it is worth either asking an independent financial advisor for a model or at the very least get a detail of what the total repayments will be, including all penalties.

Here’s some examples of what you might want to be looking out for when trawling through the mortgage tables in search of best mortgage interest rates.

Exit Fees ? if you do not maintain the mortgage to the end of its term and instead repay it early then the lender may try to charge you an exit charge to cover their paperwork costs that are involved in ending the mortgage. This may even be charged at the end of the mortgage whether it is paid off early or not. Previously these have been low fees that don’t really add up to much in comparison with the figures involved in a mortgage, but some lenders have hiked up these charges to try to make more money. This is taking advantage of the small print saying that fees can be increased and can result in incredible rises.

Standard Variable Rate ? this is the standard mortgage rate that the bank will charge you once your introductory period is up. It is typically about a couple of percentage points above the standard base rate. This is where the lenders make their cash through those customers that don’t try to swap mortgages when the introductory offer finishes. If you are on the standard variable rate and the tie in period has passed, then it is high time to look at those mortgage charts.

Higher lending charge ? behind us are the days of the 125% mortgage, or at least until the lenders forget how badly they had their fingers burnt this time around. Most of the mortgage charts show the best buy deals and have various hoops to jump through, such as not lending more than 75% of your new house’s value. If you are borrowing more than the cutoff limit, then the bank may impose a higher lending charge.

Early redemption charges ? if you want to end your mortgage earlier than the offer or tie in period, there is usually an early redemption fee. This might be displayed as an amount of cash or so many months’ interest. Quite often after the tracker or fixed rate is over there is a tie in period during which you cannot change from the standard variable rate without incurring this early redemption penalty.

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Banks being banks and progress being what it is, the assistant and no-one else in the bank was able to help. Her answer was for him to call the Customer Retentions team. Doesn’t that say a lot about the bank and how it values customers ? not Customer Care or Customer Relations, Customer Retentions. A team dedicated to keeping customers, rather than looking after us, treating us as valued customers and giving us a service that we enjoy and encourages us to stay. But that is straying from the point of this writing.

Her suggestion to him was that with rates currently so low and likely to drop further, that the variable rate mortgage products offered as standard by the bank were probably about as low as he could get with the bank. Fixed rates wouldn’t drop with further rate cuts and one came only days later. Capped rates were charging the same interest rates as variable rate mortgages and trackers weren’t likely to follow future base rate cuts any further for the foreseeable future.

She still gave him the number of the Customer Retentions team to speak to, but suggested that the best answer would be to accept the variable rate offered to him and keep an eye on mortgage rates. Let the rates drop a little further, basically to rock bottom, and then see what’s on offer. The problem with fixed rates at the moment is that no bank is going to fix a low rate for a customer for 2, 3 or even 5 years, when they hope that within that time the recession will be over, the economy will have recovered and base rates will be shooting up. If base rates are likely to climb in the near future, they don’t want to be locked into a low rate where customers are paying drastically less interest to borrow money than it is costing them.

I’m sure it doesn’t often happen in the mortgage world, but currently we are seeing a very strange and unusual situation with borrowing interest rates. To be told that rather than compare current mortgage rates just to accept the standard variable rate mortgage offered is very unusual and not typical. But, if it saves the customer money, why not? I don’t know what the customer decided to do when he got back home, maybe he phoned the Customer Retention team or maybe he decided to speak to an independent mortgage advisor who would give him a view of the whole market. Personally, I’d have tried doing both.

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But what factors will be affecting the mortgage rates that are available to you from the various lenders? For a start, the type of mortgage offer that you are interested in will dictate what the bank will offer to you. If you compare mortgage interest rates for fixed and standard rates, you would usually find banks offering special rates on their fixed rates making them less than their standard rates. This is the incentive for you to approach the lender and take out a mortgage. Later, when you have passed the initial phase of the mortgage and the incentive is approaching an end, your bank is hoping that you decide to stay loyal and take the easy option and not remortgage to a better deal within the bank, or worse still, a new lender.

The length of your selected incentive period will also dictate, in part, the actual mortgage interest rate that you are being charged. For example, you may get from your lender a very low fixed rate mortgage if you only fix it for 6 months, but a slightly higher interest rate if instead you are trying to fix the mortgage interest rates for 5 years. Tied into this, there may be a further lock in period once the incentive has ended, during which you are forced onto the lender’s standard variable rate mortgage product. This time, typically the longer the lock in period, the better the incentive rate that you will be offered at first to draw you in.

How much you are able to put down out of your own money as a deposit may also affect the mortgage rate that you are offered when you first take out your mortgage. For example, if you are unable to put down at least a minimum of a 25% deposit on your new home, then you might find that the interest rate jumps up by a quarter or even half of a percentage point as an insurance policy against you defaulting and owing them a lot of cash.

Trying to compare best mortgage rates on your own is a difficult task. It can be much easier with the assistance of a mortgage broker and much safer than reading around websites to find the best offers, and it might save you a small fortune if you can take advantage of some free expert advice.

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To understand what these charges are going to end up costing you, it is worth either asking an independent financial advisor for a model or at the very least get a list of what the total repayments will be, including all charges.

Here’s some examples that you might want to be looking out for when trawling through the mortgage tables in search of mortgage rates.

Exit Fees ? if you do not keep the mortgage to the end of its term and instead complete it early then the bank may try to charge you an exit fee to cover their paperwork costs that are involved in ending the mortgage. This may even be charged at the end of the mortgage whether it is paid off early or not. Previously these have been insignificant fees that don’t really add up to much in comparison with the figures involved in a mortgage, but some building societies have hiked up these fees to try to make more money. This is taking advantage of the small print saying that fees can be increased and can result in incredible rises.

Standard Variable Rate ? this is the standard mortgage rate that the lender will charge you once your introductory period is up. It is normally about a couple of percentage points above the standard base rate. This is where the building societies make their cash through those customers that don’t try to remortgage when the introductory offer finishes. If you are on the standard variable rate and the tie in period is over, then it is high time to look at those mortgage charts.

Higher lending charge ? over are the days of the 125% mortgage, or at least until the lenders forget how badly they had their fingers burnt this time around. Most of the mortgage charts show the best buy deals and have various hoops to jump through, such as not lending more than 75% of your new house’s value. If you are borrowing more than the cutoff, then the lender may charge you a higher lending charge.

Early redemption fees ? if you want to end your mortgage earlier than the offer or tie in period, there is usually an early redemption fee. This might be expressed as an amount of cash or so many months’ interest. Quite often after the tracker or fixed rate ends there is a tie in period during which you cannot change from the standard variable rate without incurring this early redemption fee.

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