The
interest
is the amount the mortgage
lender
charges for lending you the money and it's one of the main
ways it makes its profits.
The lower the interest rate, the less money you have to pay
back over the mortgage
term.
Lenders boost their profits still further by charging a range
of fees
to set up and operate your loan, and it's important to take
these into account too when you're choosing a deal.
A sneaky trick lenders play
• When lenders offer especially attractive low
rates of interest, they are rarely as good as they
seem, because there are often high fees attached.
• Conversely, deals with low fees (or
even no fees) often come with relatively high rates
of interest.
As a borrower, the trick is to find a deal that
strikes a good balance.
To do that, you need to know
How to understand interest rates
Interest is charged as an annual percentage of the amount
you originally borrowed.
In other words, if you borrowed £100,000 at an interest rate
of 6 per cent for a year, you would have to pay £6,000 interest.
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