Summary

Lenders publish their APRs so we can make an informed decision on which mortgage to choose. But there are more charges being added on behind the scenes, and they're rising ( life insurance quotes ) at an exponential rate, as this article finds.

Mortgages. Rising add-on charges beat inflation

Author: Anna Richardson

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Life Insurance News

same old mortgage provider that just isn't competitive compared to all the new deals. Well okay, not everyone, but enough for the lenders to sit up, take notice, and start introducing some additional charges to make sure that they don't end up out of pocket.

There are a lot of good deals out there, you may see an opportunity ( cheap mortgages ) to remortgage for 4.4% on a two year fixed interest contract. But there will be other charges for you to pay, and the small print will no doubt reveal that you will also be penalised if you decide to remortgage again when the two years is up. It's essential that you find out what these costs are before taking the plunge, as it may not be worth it.

The lenders have upped some of their charges as a reaction to the trend towards remortgaging, the people they call 'rate tarts'. The aim is to charge people for leaving their ( best mortgages ) mortgage, although the new customers they receive will not be penalised, until they leave that is. However, with the remortgaging business as big as it is, with 1.1 mortgage holders switching lenders in 2005, it's no surprise that the lenders want to cash in. In total, £117 billion worth of money moved from one lender to another in 2005, so there's a lot of money to cash in on.

We think that some companies are going way too far though - we found one mortgage whose additional charges added up to £1,000, and that was only to move to ( personal loans ) another mortgage within the same company.

The lenders are adding on charges wherever they can. Here are some examples:

administration charges - charging customers a set rate for a letter or phone call. With one lender, it would cost you £35 to receive a ( life insurance advisers ) photocopy.
increased valuation fees,
increased penalties for paying off early (known as early redemption penalties,
an admin charge for leaving the mortgage - called an exit fee.

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Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it.