Some of the marketing departments of the banks and building societies adopt the same clever (some may say sneaky) advertising tricks as the big supermarkets when it comes to attracting consumers through their doors.
Today HSBC has been making the headlines with a new 2 year fixed rate mortgage at just 0.99% (maximum 65% loan to value) – yes that’s right an interest rate of less than one per cent.
However it’s not until you read the small print that you realise there’s also a fee of £1499 to pay for this mortgage – on a product that only lasts two years – so in effect that’s an extra £62.46 per month on top of your mortgage payment.
Whether this deal is as good as it looks will depend on the size of your mortgage – if you’re borrowing £220,000 or more then it makes financial sense but for smaller sums there are cheaper alternatives.
Foe example if you only needed £150,000 then if you opted for the 2 year fix from Norwich and Peterborough Building Society at 1.49% with a much smaller £195 fee – over the course of 2 years it works out £464 cheaper than the HSBC 0.99% offer.
It just emphasises the need to take the headline deals with a pinch of salt and to ensure that any comparison is based on the total cost and not the interest rate in isolation.
Always get an independent mortgage adviser to crunch the numbers on your behalf – that way you won’t be caught out out by the marketing hype and pay more than you need to for your home loan.