What to watch out for when remortgaging
Remortgage Guide: #8
What to watch out for when remortgaging
As mortgage rates become ever more competitive some lenders and brokers try to make money elsewhere in the remortgaging process.
Higher Lending Charge
A higher lending charge is an insurance policy which some lenders force borrowers to take out if they are borrowing against a property at a loan to value ratio of more than 90 per cent. It protects the lender if the borrower defaults on their mortgage and the property has to be repossessed. Higher lending charges are very expensive and only cover the lender, so are best avoided.
Mortgage Payment Protection Insurance (MPPI)
Sometimes called Accident Sickness and Unemployment Insurance. MPPI is supposed to cover mortgage payments if you have an accident, lose your job or become ill. MPPI policies are often expensive and generally have lots of complicated exclusions. You may have to wait several weeks before the policy kicks in, and then it will usually only cover your mortgage repayments for one year. If you do decide you want MPPI, shop around for a good deal.
Bundled buildings/contents insurance
Be wary of deals which insist that you buy your buildings insurance through your lender. The amount quoted may seem reasonable in the first year, but often the lender will charge whatever premium increases they want to in subsequent years. Shop around for a good deal.
Life cover from your mortgage seller
Do not assume just because someone sold you one financial product they will automatically get you a good deal on life cover or other insurance. Shop around.
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