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Mortgages Only One In 200 Can Understand: Home-Buyers Left Baffled By Complex Deals That Make It Hard To Identify Cheapest Option

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http://www.dailymail.co.uk/news/article-2344805/Mortgages-200-understand-Home-buyers-left-baffled-complex-deals-make-hard-identify-cheapest-option.html

Home-buyers are being baffled by mortgage lenders with complex deals that make it hard to identify the cheapest option.

Banks and building societies have latched on to the fact most buyers choose a loan according to the lowest APR interest rate.

However, they are confusing buyers by applying an attractive low rate on fixed-rate deals but then hitting them with set-up fees of up to £2,000.

..

Research by consumer champion Which? found just one in 200 people could correctly rank the cost of five two-year fixed-rate mortgages.

It is the most expensive purchase your ever going to make why bother doing any homework on it? Just go for the lowest monthly payment and bob's your uncle.

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Ranking the two year fix products to get the 'cheapest option' seems a tad pointless in light of the mortgage term length

Edited by Ash4781

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It's a 'Confusopoly' - a system designed to stifle competition by making things so confusing that people give up and stay with their current provider. There's hardly a single area of consumer finance that doesn't operate this system. Hell, it took me almost 6 months to close a savings account with Nationwide.

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A bit like mobile phone contracts then.

...and energy tariffs.

they do it intentionally I think to confuse those who don't know what they want, how they want to use it and don't know how to use a calculator. ;)

Edited by winkie

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I don't quite understand why a fee is needed...

It's like supermarkets having an entry fee.

The fee or the standing charge are there to make the underlining rate look cheaper when the overall total cost could be more expensive than a higher rate at the time........not only does the amount required or used and term required affect the cost but also the guestimate of what future costs will be.....sometimes security and peace of mind costs more than greater potential future risk but not always......all fun and games. ;)

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For those of us who are reasonably numerate, this is not necessarily a bad thing. Look on it as natural selection for mathematical ability!

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A bit like mobile phone contracts then.

As someone who has worked in the mobile industry I can tell you that it is absolutely deliberate. The basic strategy is to create deals and bundles that deliberately mismatch actual typical usage patterns so that people perceive that they are getting value for money but don't end up using all the minutes/sms etc that they are paying for.

Edited by goldbug9999

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they arent hard to understand, if you spend 5 minutes thinking about it.

That means most DM journos wont understand it all.

Of course, this is a softener for the first IO mis-selling claims...clearly, understanding plain English is beyond the abiltiy of most mortgage holders...according to the DM.

Triples all round.

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As someone who has worked in the mobile industry I can tell you that it is absolutely deliberate. The basic strategy is to create deals and bundles that deliberately mismatch actual typical usage patterns so that people perceive that they are getting value for money but don't end up using all the minutes/sms etc that they are paying for.

How as a consumer do you get value from unlimited? :P

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How as a consumer do you get value from unlimited? :P

By working out the cost difference to a limited contract and then working out how much you use above the limited contract and what it would cost. If the difference in cost between the two contracts is more than the cost of the phone calls you normally make above the limited contrcat then you're wasting money.

...oh, it was a joke, right? :lol:

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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