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Mortgage broker warns borrowers over cheap deals

28th July 2004 | back to article listings BACK    print this article PRINT

Thousands of mortgage borrowers are being lured into cheap looking home loan deals - only to find they are trapped by inflexible arrangements costing many thousands of pounds over the odds, new research claims.

The alarming research by mortgage broker MYMORTGAGEDIRECT (MMD) suggests that one in three of all new mortgage and re-mortgage borrowers are being tripped up by the small print in major lender policies.

It warned borrowers to be wary of ostensibly attractive deals as many products carry exceptionally long tie in periods.

"Far too many borrowers are being seduced by these bargain basement sounding, heavily discounted products - only to find they come with a really nasty sting in the tail," said MMD boss Peter Barrett.

"Lenders are now starting to slip these deals back in as they desperately need to retain customers in today's cut throat market: you may well get a great rate for a couple of years, but enjoy it while it lasts as the hangover kicks in as soon as the honeymoon period is over," he added.

A spokeswoman for the Council of Mortgage Lenders said that a significant number of mortgage lenders were reintroducing extended tie in products in an attempt to retain customers in today's hugely competitive market. But she warned borrowers to make sure they knew what they were getting into.

"It is all well and good to take advantage of cut price deals in the early years of the loan, but borrowers must be aware of the consequences of significantly higher repayments when the discount period is over," said the spokeswoman.

"And all new and re-mortgaging borrowers should scan the small print before signing up for a mortgage - extended tie in deals could prove extremely expensive to get out of."

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