LIFETIME MORTGAGE

Remember every time you switch you are incurring the costs involved in switching deals.

These new products are challenging a huge part of the mortgage market that has grown up on the basis of mortgage advisers guiding consumers to discounted short-term deals.

These new products are known as "lifetime mortgages" because they are designed to make you want to stay with the lender throughout your borrowing lifetime.

It is claimed that a good lifetime tracker mortgage is so competitive that anyone borrowing £150,000 or less would not be better off if they switched to the best two-year discount variable offer every 2 years.

Good lifetime products are guaranteed to stay a small percentage above the Bank of England's base rate throughout its entire time.

If you are a "rate tart" - industry slang for someone who saves money by regularly chasing short-term discounts, the costs incurred in changing every two years are all but eaten up by solicitors, valuation and admin fees.

Much of the cost of switching deals is fixed, so the smaller the mortgage, the less likely it is that looking for a better offer will be worthwhile.

Conversely, for people with mortgages substantially above £150,000, shopping around for discounted rates remains worth doing.

For people with loans under £150,000, there is a strong argument for going for a lifetime deal.

There are a minority of mortgage brokers who do not put their clients' interests first and steer them to two-year deals so they come back again in two years' time, allowing the broker to earn more.

A further downside to chasing the best discount rates is the fact that some lenders will hit you with early redemption penalties if you need to sell your house during a discount period.

At mortgage map all our brokers are ethical and will only recommend what is in your best interests. If you wish to speak to one of our brokers please complete the enquiry form.

Enquiry Form, CLICK HERE.

Lifetime Mortgage