Borrowers urged to check behind headline mortgage rates

New analysis by HSBC of July's best buy fixed rate mortgages shows a huge difference in early redemption charges. Based on a typical £150,000 repayment mortgage being redeemed 12 months early, this can be as high as £6090 between the cheapest and most costly lenders.

With economists suggesting interest rate increases are months, if not years away, many experts are advising borrowers to take longer term fixed mortgages, often five years or more. As this week HSBC launched its lowest five year fix ever, at 3.95 %, we have compared five year fixed rate mortgages which have appeared in best buy tables in July (2010). However, rather than checking to see how cheap they are to get into, HSBC has checked to see how expensive they are to get out of.

In some cases, if borrowers are closer than 14 months away from their fixed rate ending, it would be cheaper to simply continue paying back their mortgage than attempt to redeem it early.

Martijn van der Heijden, HSBC's Head of Mortgages, said: "HSBC has a long standing reputation for providing mortgages with transparent pricing that offer real long-term value with no hidden fees.

It is essential that borrowers check behind headline rates for high exit and redemption fees.  Although most borrowers plan to hold onto loans until at least the initial rate comes to an end, unforeseen circumstances can crop up, so choosing a mortgage that won't cost you a fortune to get out of is an important consideration."