Mortgage brokers have issued a warning to check the early exit penalties, to those who are considering signing up to a fixed rate deal in a bid to secure low interest rates.
In November this year, the base rate was increased by the Bank of England, from 0.25% to 0.5%. This was followed by a number of lenders increasing their mortgage rates, resulting in homeowners looking for longer term fixed rate deals to secure a low rate option. Ray Boulger, a broker with John Charcol, warns that it is crucial to check whether there are early exit fees in place, and what they are.
According to Boulger, there are a number of lenders that offer longer-term fixed rate mortgage products without an exit fee strategy, which are worth consideration. Boulger added that early exit fees are often overlooked, and although a fixed rate deal offers security, the option to leave the deal early is important. He stated that though deals with lower early redemption fees tend to have slightly higher interest rates, they were worth considering.
Interest rates and early exit fees will vary according to the lender, and some may offer a fixed rate deal that has early exit fees if you leave during the first half of the term. However, the overall cost of the mortgage should be taken into consideration, and a mortgage advisor who has studied on a CeMAP training course will be able to offer support and guidance in this area.