Honeytrap Mortgages and Avoiding the Mortgage Trap
A honeytrap mortgage is where you think you’re getting a good mortgage deal, but hidden product fees and missed terms in the small print actually mean you’re not.
Lenders draw you in with a hard-to-beat rate but then make it super-expensive to purchase the product, or they hike up the exit fees or sky-rocket interest rates once the fixed rate period is over.
One of the largest honeytrap mortgage scandals was around the 2008 financial crash, where people were sold interest-only and low-deposit mortgages from the likes of Northern Rock.
When the market crashed and these lenders went under, their mortgages were sold to private companies who then raked up interest rates as soon as the fixed rate period was over.
There are now lots of cases where people have fallen victim to the mortgage trap – entering an agreement that they then can’t leave due to changes in financial circumstances.
Honeytrap mortgages and the mortgage trap often go hand in hand, with the increased interest rates meaning people are constantly trying to pay back what they can’t afford.
How to avoid honeytrap mortgages and the mortgage trap
Use a commercial mortgage broker like FC Funding to find and arrange your mortgage on your behalf. They’ll make sure you’re getting the best deal and check to ensure you’re not going to fall into any traps in the future.
Check the small print and then check again – especially when it comes to:
• Product fees
• Fixed rate periods
• Exit fees
• Interest rates
• Early repayment fees
And remember – if it looks too good to be true, it usually is. If a lender is offering super-cheap interest rates, it’s probably because they’re planning on hooking you in only to sky-rocket your rates once your fixed rate period is over.