Mortgage deal costs 'can rise'

02/12/2009

Concern has been raised over borrowers taking out mortgage deals without first understanding the terms and conditions attached to the loan.

Specialist property website Firstrungnow.com pointed out that rates for many mortgage deals increase sharply after a short time period, leaving customers forced to find a new loan or to continue paying a larger amount each month.

This in turn can lead to an increased risk of money problems such as falling behind on repayments.

Figures released by Moneyfacts.co.uk this Monday (November 30th) showed that UK lenders have increased the number of two-year fixed-rate mortgages on the market from 257 a year ago to 410.

Longer-term loans, carrying fixed rates for five or more years, are also available from the firms.

Helen Adams, managing director of Firstrungnow.com, said: "Typically, a deal which lowers your mortgage costs at the beginning of the term can help you in the first couple of years but you should always be aware that those costs will go up at the end of the period."

She added: "I think it is quite difficult for people to be aware of these offers or to even fully understand them."

Moneyfacts.co.uk also revealed that there are currently 293 five-year fixed rate mortgages available on the market.

A year ago, this total was just 241.

Tags; Debt Management and Banking, Young Family Finances,

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