Facts to Remember about Mortgages
Your property investment will be an expensive purchase, so getting the finance right is absolutely vital. This list gives you the main points to bear in mind when arranging your mortgage.
Don’t accept the first mortgage offered to you by your bank. Shop around to see whether it’s competitive.
Use an independent mortgage broker to find a property loan. Doing so can save you time and effort searching the market for the best deal.
Make sure you don’t overstretch yourself: can you afford to meet the repayments if interest rates rise? To find out, write down your incomings and outgoings. The balance is the amount you can afford to spend on the mortgage each month: if it’s not enough to afford a decent loan, make sacrifices or delay the purchase until you can afford it.
Save up a deposit. Not all lenders require one, but if you’ve got a deposit, you’ll get a better rate, have lower monthly repayments, and won’t have to pay a mortgage indemnity guarantee.
Avoid extended redemption penalties. Paying a penalty for switching mortgages before a fixed offer comes to an end is fair enough, but don’t accept a mortgage with penalties that extend beyond this period.
Watch out for compulsory insurance. Some lenders charge borrowers a one-off fee if they don’t take out their buildings or contents insurance. It might be cheaper to pay this and buy your insurance elsewhere.