how do mortgages with rates starting from 2.49%

Deals_2

for example work?
here is an example: "West Bromwich BS Direct Tied 2.49% To Feb 2009 7.34% 95% Overhang " .
anyone gone into these sorts of mortgages? what does overhang mean? thanks again

_Andy_

Basically means you get a nice attractive, low rate to start off with, but you're then tied in for x amount of time on a rubbish rate afterwards

kingkano

check the arrangement fee too

Mr_helpful

these are a recipe for disaster unless you were paying a large loan now for the next two years and knew you would have the spare money to pay SVR during the tie in. Otherwise avoid at all cost

Deals_2

here are the full details of another
Lender: Norwich & Peterborough BS
Initial Rate: 3.94%
APR: N/A
Max LTV 90%
Type: Discount
Scheme Duration 2 years
True cost Over year: n/a
Monthly repayments: N/A
Lender's Base Rate: 7.24%
Portable: Yes
Cashback: £0 paid to you on completion.
Early Repayment Charge: 5% of outstanding loan first 3 year, 4% of outstanding loan next year, 3% of outstanding loan next year
Number of monthly repayments 24
Product Costs and Fees
Paid upfront Added to mortgage On completion
Valuation Fee: Valuation fee will depend on the value of property.
Booking Fee: £0
Arrangement Fee: ££0.00

if fixed for 2 years dont actually undersand the issues about year 3 etc etc. thanks

sammyjammy

Thats the whole point, they make their money back by insisting you stay with them after the preferential rate has gone, this would on their SVR and you would be charge early repayment fee of those % if you leave before the set term. So for example 3.94 for 2 yrs and then 7.34% for two years, all tied in

Mr_helpful

If you have a deal with no overhang it means once the fixed period ends you are free from redemption penalty and can remortgage. If there is an overhang then once the fixed period ends you paying the standard variable rate and are still unable to change lender for a period of time (the overhang) without paying a redemption penalty. As I said above to be avoided. In fact I dont quote anything with an overhang unless client specifically asks for it which doesnt happen very often.