12
Nov
Chancellor's mortgage recommendations rubbished
Mortgages with longer terms at fixed rates, which were recently
endorsed by the Chancellor of the Exchequer Alistair Darling, may
not be the best option for first time buyers, it has been
claimed.
Mr Darling recommended the longer-term fixed rate loans as a way of
helping first time buyers to gain a foothold on the property
ladder.
However, according to research from Stroud & Swindon Building
Society, had borrowers opted to opt for variable rate mortgage on
£100,000 loan they would have paid £80,340.97.
Meanwhile, if they had gone for a series of two-year fixed rate
deals, they would have paid £77,903.76.
If they had followed Mr Darling's advice and chosen a ten-year
repayment mortgage, however, they would have paid
£88,141.20.
Paul Chafer, sales director at Stroud & Swinton, said: "Whilst
it is obvious that something needs to be done in order to help
first-time buyers get on the housing ladder, the current ten-year
mortgage deals are not necessarily the right solution.
"First time buyers are usually on a very tight budget so any saving
they can make on their mortgage repayment helps. This research
shows that long-term fixed rate mortgages are not always the most
cost effective option."
