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Borrowers’ search for cheap mortgages blinds them to costly penalties – Legal & General

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  • 25/05/2021
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Borrowers’ search for cheap mortgages blinds them to costly penalties – Legal & General
More than 60 per cent of borrowers say the interest rate is the most important factor when choosing a mortgage and ignore fees attached to the loan, analysis from Legal & General Mortgage Club reveals.

 

Just 13 per cent of borrowers see early repayment charges as a serious consideration despite the risk of facing penalties that run into the thousands of pounds.

The mortgage club looked at a scenario where a borrower with a £250,000 mortgage had chosen to lock into a five-year fixed rate. If the borrower decided to move or remortgage early, they could face charges of up to £10,891.

Kevin Roberts (pictured), director, Legal & General Mortgage Club, said: “The crisis has taken its toll on the finances of people across the UK and many are now looking for ways to keep their household bills to a minimum.

“A great place to start is with a mortgage as this is normally people’s biggest monthly expense. So, reducing its interest rate down can only be a good thing, right? Well, our latest research shows why it is also important to look beyond the headline rate and consider other factors, like exit charges. Not doing so could mean having to pay thousands in unexpected costs when it comes time to move home or remortgage.”

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