Top tips to keep an eye on when looking for a mortgage
When looking at arranging your mortgage, try and look beyond the headline APR rate and read the small print very carefully.
Check to see if you pay annual or daily interest
Some lenders will only calculate your interest on an annual basis, which means that if you have paid off extra money during the year then you are actually paying interest on money you no longer owe,
Ask: -What interest rate calculation method do you use?
Check out to see if there is a *higher lending charge
An HLC is basically a payment for being a higher risk borrower (e.g. typically if you do not have a big deposit e.g. under 5%). HLCs are normally calculated as a percentage of the portion of the loan in excess of 75 per cent of the property value.
How long is the term?
Mortgages with a longer term e.g. 30 years equal more interest equal more expensive. A great tip is to try and load your initial payments if you can afford it so that you can pay less interest over time. Even £25 a month extra could save you thousands of pounds in interest over 25 years.
Look out for early repayment penalties
The mortgages with great deals e.g. fixed or capped interest rates tend to have a downside, which is typically a charge for repaying the loan early. This is done in order to tie you in so that you do not change mortgage every year. These fees are typically expressed as a percentage of the overall mortgage amount or what is left to pay off. For example if you take out a 5 fixed mortgage over 5 years, the lender may state that in year 1 the repayment charge is 5%, then 4% in year 2, 3% in year 3 and so on. Then once the 5 years is up you are free to move onto other mortgage products or lenders without incurring a fee for doing so.
Be careful of buying insurance products at the same time as taking out your mortgage*
Many lenders try and sell you life, home and contents insurance when you are taking out a mortgage. Some may make it a condition of the mortgage. Beware of this, it may actually be a good deal but shop around first and get other insurance quotes, you may end up saving yourself a few hundred pounds a year by doing so.
