Short ended Fixed Rate Mortgages
Many homeowners are finding they have been caught short with their fixed rate mortgage deals. The most popular type of mortgage deal seems to be the 2 year fixed rate mortgage, however many people find themselves getting less than the 2 years they have signed up for.
Certain mortgage offers with a 2 year fixed rate have been offering a short sell by date. For example, a mortgage lender currently has a special deal offering a fixed rate mortgage until September 2009. This is in fact only a 23 month deal, leaving the customers having to remortgage or pay a higher interest rate a month earlier than they thought.
One particular mortgage company in question even has a two year fixed rate ending in august 2009, a shortfall of 2 months. Add to that approximately one month (about the time it takes to complete on a mortgage) then that is 3 months short. Many people are not thinking ahead about the exact end date when signing up to these mortgage offers - but they should be if this kind of practice is going on.
This oversight can be costly as the difference between a low, short-term fixed rate and the standard variable rate which it will switch to can be quite big, with the homeowner coughing up the extra. Not only that, but if home-owners are paying for re-mortgaging costs more frequently because they are not always getting the two year deal they thought they were, this too will add up to a big chunk of cash being wasted.
Not many lenders have genuine 2 year deals to offer, mainly because they cannot afford for it to remain open-ended indefinitley. Borrowers should be aware of this when looking for a new mortgage otherwise you could lose hundreds of pounds.
It is a common misconception that a 2 year fixed rate deal starts from the time it is taken out - it doesn't. I suppose the trick is to stay alert and check your dates thoroughly before signing into anything.
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