Bradford & Bingley is urging borrowers to look beyond the hype surrounding some of the mortgage challenges promoted at the moment and to read the small print carefully.
Otherwise, it could end up costing borrowers more in the long term it says.
NatWests mortgage challenge is restricted to borrowers with Abbey, C&G, Halifax and Lloyds TSB and promises to pay a 250 if it can’t lower a borrowers new mortgage repayments.
Nationwide promises to pay a150 if it cant match or lower a borrowers new monthly payments with either Halifax, Abbey, C&G, HSBC, NatWest, Woolwich or Northern Rock.
However, lowering monthly repayments is only worthwhile if it saves the borrower money over the term of the deal.
If it doesnt, when including arrangement fee costs, exit fees, possible legal and valuation fees, then there is only one winner, and its not the borrower, B&B says.
Duncan Pownall, mortgage development manager for Bradford & Bingley, says: “On the surface challenges such as those promoted by NatWest and Nationwide appear a winning proposition, however, on closer inspection it could turn out to be a losing one for the borrower.
“Lowering monthly repayments is easy to achieve and is futile unless it ultimately saves the borrower money over the term of the deal.
“There could be a number of instances where a borrower actually ends up paying more because of the amount of fees they have to pay.
“Its imperative, therefore, that a borrower reads all the small print carefully before signing up to any new deal.”