12 Nov

Chancellor's mortgage recommendations rubbished

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."

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