<< Most Recent Articles

Mortgage holders 'could benefit from new comparison tool'

A new method of comparing the cost of loans may be beneficial to homeowners when planning their finances, the Council of Mortgage Lenders (CML) has said.

While consumers usually employ the annual percentage rate (APR) when comparing mortgage deals, the new measure - dynamic annual rate (DAR) - could give a more accurate idea of the cost of a home loan.

This is because the DAR is calculated for any period of time for which a loan may be kept, meaning that it can help borrowers to understand how future interest rate changes would affect their mortgage payments.

CML director general Michael Coogan said: "The DAR provides a useful basis for discussion on the ways mortgage lenders can make consumer information as comprehensive, accessible and meaningful as possible."

However, he was also careful to point out that the APR, which is worked out on the assumption that a loan will be held until maturity, is not the "wrong way" of calculating loan cost.

The CML recently revealed that the number of mortgages taken out by first-time buyers fell by seven per cent from June to July this year. A personal loan can help with mortgage payments and the cost of running a home.

See how much you could borrow with a home loan from Lombard Direct.

21/09/2007 16:54:58

Most Recent Articles