Market has been and will be ever and forever so competitive in the mortgage sales. Once you decide to buy a property, less than 1 week few bankers will call you and try to offer you their mortgage products. Just there is something that is bugging me…in order to get the sales, the agents are even willing to mislead of confuse the investors.
Can you tell the difference?
ZECvsFEL
First of all let me give you a brief introduction what is entry cost. Basically it means the legal fees that you have to pay for taking up the loan. A rough idea is that it will be around 2% of the property price.
Non-ZEC = Non Zero Entry Cost, means that you have to pay for the loan legal fees in CASH
ZEC = Zero Entry Cost, means that you do not have to pay for the loan legal fees
FEL= Finance Entry Cost, means that bank will help you to pay first BUT this fees will be included into your loan amount. Thus effectively, you are still paying for the legal fees.
If you are taking up a Non-ZEC or FEL package, the bank will be able to offer you a better rate (eg BLR-2.3%) because they don’t need to pay for your legal fees. Vice versa if you take ZEC mortgage, you will get a less attractive mortgage rate but save on the approximately 2% legal fees.
I need to highlight here is that there are many desperate bankers will promote FEL loans so that they will be able to offer better rates and claim that YOU DON’T NEED TO PAY FOR THE LOAN BY CASH, but never care to further clarify that the legal fees will be included into the loan. Thus Caveat emptor ( is Latin for "Let the buyer beware")