Baffling number of mortgage products

If you want a mortgage you are spoilt for choice. In fact, there are so many mortgage products available that consumers are bamboozled by them. Some providers have over a hundred products, and their so-called bargain deals sometimes turn out to be more expensive than standard products.

The number of mortgages available, together with the proliferation of different fees attached to them leaves customers shaking their heads in confusion.

Abbey currently offers 89 different mortgage products, Scottish Widows has 97. Cheltenham & Gloucester just beats three figures with 101, and Standard Life has an amazing array of 219 different homeloan products!

Because mortgages can be so complex it is easy for customers to fall for apparently bargain rate deals, only to end up paying more than they would for higher interest rate products.

One example is Yorkshire Building Society’s 4.99% two-year fixed rate. If you took out a £150,000 repayment mortgage, you would have to pay a 2% fee of £3,000 and your monthly repayments would be £876. However, compare this to Cheshire Building Society’s two-year fixed rate deal, at a higher interest rate of 5.69%. This would mean monthly repayments of £938, but the fee is only £899. The total cost of the Yorkshire deal over two years would be £24,024 whereas the total cost of the Cheshire deal would be £23,411, a saving of £613.

The number of mortgage products available is baffling and even those from a single lender are too many to get to grips with. Some have come about as lenders try to design mortgages for specific situations, for example remortgage packages, first-time buyers and large loans.

As well as the mortgage rates and fees, there are also valuations, legal fees and higher lending charges to consider. Higher lending charges are levied on homeowners needing to borrow above certain loan-to-values. These can often prove more expensive than taking a slightly higher interest rate product without no charge.