January is traditionally the time of year for hitting the sales. But while the high street may be a place to find a bargain if you are looking for a new sofa, be wary of lenders offering sales on their mortgage products.
Take the lender offering a range of fee-free mortgages during January. These may be welcomed by borrowers who are trying to save on set-up costs but will it turn out to be false economy? Rates start at a competitive 2.39 per cent on a base-rate tracker but you will need a 40 per cent deposit and the maximum loan size is £500,000. Those who don’t fit these criteria will inevitably end up paying more or indeed simply fail to make the grade and be rejected, which could have a detrimental impact on your credit rating.
Many people will use this time of year to undertake a general review of their finances, which is a good habit to get into. While interest rates have been held at 0.5 per cent for what seems like forever, this won’t necessarily always be the case. There are other factors which affect the pricing of mortgage rates so it’s important to plan ahead. The eurozone crisis could have a huge impact on the wholesale money markets, which dictate the cost of borrowing. Indeed, a number of lenders have already raised rates over the past few weeks and others are likely to follow suit.
What is crucial is that you compare any mortgage deal with what else is available, particularly if you have complicated income streams, require interest-only, or need to move particularly quickly. It is important to seek independent advice from a specialist broker. A high-street lender offering mortgages in their January sales won’t necessarily be the best place to start.