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Old mortgage deals still on an overview

18/04/2007

High house prices are making life difficult for first-time buyers.

Moneyfacts has concluded that most borrowers have lost interest on CAT, capped and extended tie-in deals. These different finance options have still got more to offer.

Below are mortgage deals which people are not very interested in;

There was a time where there were over 39-capped mortgages on the market; today figures estimate there are only 11 remaining.

It is similar to a fixed rate; the rate will not reach over a certain limit.

Between two and five years the deals vary, with arrangement fees range from £495 to £1000.

The interest rate via capped mortgages hover at around 6.28% and 5.67%. This a rate which can not be beaten with today’s deals.

Mortgage analyst Julia Harris from Moneyfacts, said: "Fixed rate deals continue to offer a very creditable deal for those looking for protection against rate rises."

Capped deals come into their own if rates are expected to fall in the short term or in times of extreme uncertainty."

Extended tie in is when the mortgage rate for a short period of time is fixed then later if the homeowner decides to change, they would be hit with a redemption fee.

Julia added: "Extended tie-in products were originally designed to offer borrowers low initial monthly repayments, at a time when expenses were stretched with moving costs."

It gave first-time buyers time to settle into their new financial commitments."

But the danger is when the low deal rate finished and the higher tie-in' rate was charged.

In 1999 the CAT standard was brought in to the market to help borrowers. It simply meant that the mortgage criteria were up to date with the Government via charges, terms and access.

Also including no hidden extras in-case things went the wrong way.

Julia spoke further: "Today its guidelines are outdated. Only one product has survived but perhaps the standard should be revamped, bringing it up to date with market trends."

There are still many features of such a mortgage which could be recognised and rewarded for being borrower friendly'."


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