Re: Query on Annual Mortgage Interest calculation

Yes, its called 'not taking out that sort of mortgage'.

The FSA will start regulating mortgages next year and will become responsible for truthful and comparable advertising of interest rates.

Tony

For Christ's sake, how many f***ing laws do you want? The government cannot legislate for stupidity.

The answer is to read the terms and conditions of the mortgage *before* you take it out, and if you don't like them, then go to another mortgage lender. It's not as if there's no choice or competition.

You can always remortgage as well, once you've taken out the mortgage, and move to a lender who gives a better deal. If enough people do this, then you will find that the lenders that pay annual interest will lose customers, make smaller profits, and eventually will either go out of business or start to offer a better deal.

It's called capitalism. It works very well and best of all, requires no laws or regulations - it just works!

I disagree with this point.

Capitalism does require some laws and some recourse to the courts.

That said you are right. Just move the mortgage.

Kind regards

This is very common, but not all lenders use the method.

It doesn't matter on the whole for interest only mortgages - the amount outstanding at the end of the year is the same as the beginning.

It doesn't actually make a huge amount of difference in the early years of repayment mortgages - again you owe almost as much at the end of the year as the beginning.

Many of the lenders who calculate daily interest charge a slightly higher interest rate, so don't assume that daily interest is automatically better. It might, however, be well worth considering in the last few years of a repayment mortgage (and is the way I will go personally).

If you plan to pay of a lump sum, I'd recommend paying it off 1-2 weeks before the end of the mortage year, so gaining maximum benefit.

Note that not all lenders have their mortgage year ending at the end of December. At least one of mine was the end of January.

But you're suggesting it's not truthful to have different ways of calculating interest. As long as you've been told what they are there's no untruth. In truth, borrowers don't look beyond their noses.

Rob Graham

In message , Rob Graham writes

Quite right to!!

If the OP just compared APR's then he'd get a true comparison.

You have just made my point. I never wrote that the advertisements were untruthful but your nevertheless inferred it from accurate words which said something different. And the same goes to the headline rates for interest of mortgages which are accurate but a major problem with them is that they can not be compared by the typical consumer borrower with the headline rates for competitive products.

Then the obvious solution is that the transparent truth must be placed right there in order to prevent them from being mislead.

Tony

"Rob Graham" wrote

Tony mentions both "truthful and comparable". Why do you just pick on the first one, "truthful" ?? You could just as easily say he's suggesting "it's not comparable" - which is quite likely to be the case! :-)

Because he appeared to be saying that the lenders' adverts are not truthful. However, he says he didn't say that and that I just inferred he'd said it.

Never mind.

Rob

In message , Doug Ramage writes

Yes I take your point, but you need to do it over the whole period of the mortgage, not just during the 'offer' period.