Borrowers urged to be careful

27-Nov-2006

Experts are urging borrowers such as first time buyers to be careful when arranging mortgages, with a view to saving more in the future and getting the most value out their deals.

Halifax recommends that first time buyers and other borrowers look towards daily interest rates, arguing that many lenders calculate new mortgages on an annual or monthly basis despite having already made a switch to daily rates.

Borrowers can stand to benefit from daily rate mortgages because debts are assessed and reduced on a more regular basis.

Mark Heaton, head of mortgages at Halifax, states that borrowers should "look beyond the headline rate", stressing that daily rates could offer the best returns in the long run.

"Daily interest saves customers a lot of money over the life of their mortgage and should not be overlooked."

Mortgage lending remains strong into the end of the year following the Bank of England's decision to raise rates to five per cent.

Figures from the Council of Mortgage Lenders indicate that mortgage lending topped £30 billion in October, up by four per cent compared with the month previous.

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As the market for first time buyers toughens, new companies are offering new services to help first time buyers buy new properties by working with the house-builders.

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