Some lenders are offering exiting property owners the opportunity, after their existing mortgage deal comes to an end, to remortgage onto what appear to be quite attractive rates.  Beware.

At first glance some of the mortgage deals look great.  A 95% LTV (loan to valuation), one year fixed rate of 3.59%, followed by the lender’s standard variable rate (SVR) of 3.99%. Sounds tempting doesn’t it?

The reality is that the new SVR being offered by lenders is often a much worse deal than the current SVR.  For example at Nationwide many existing mortgages are based on an SVR that tracks 2% over the bank base rate (BBR), thus you would currently be paying 2.5%.  The new Nationwide SVR being offered is currently 3.99%, a massive 1.49% higher!

The message here is to make sure you read the small print on not just the new mortgage offer, but also your current mortgage – you may find that you will be better off not changing your mortgage.  Remember, the banks are still licking their wounds following the onset of the credit crunch, they are keen to improve their bottom line profits, so check very carefully before you take up what appears to be a great offer.