| Buying a home for the first
time or moving can be a very exciting time. It can
also be very stressful. The chances are that you
will need a mortgage. |
| |
| Getting
a fair deal on a Mortgage |
| Before you decide which mortgage
would suit you best, here are some questions the
Free Debt Help's mortgage team suggests you
should ask, based on information from issues which
have caused problems for consumers. |
| |
- How much can I afford to borrow?
- How can I tell which mortgage rate is best
for me?
- What is the best type of mortgage for me?
- How should I repay it?
- Can I make lump sum payments to reduce the
size of the loan?
- Are there any redemption penalties?
- Does this mortgage come with compulsory insurance?
- What other charges will I have to pay?
- What happens if I can't pay?
- What about the small print?
|
| Further
Suggestions |
| If you have any suggestions
as to other questions that you have found were important
for you, please email us by clicking here |
| |
| Q1.
How much can I afford to borrow? |
- What will I have to pay out each month?
- If I take a mortgage with a low interest
rate to start:
- what will be the rate at the end of the
fixed period?
- what would my payments be now if I were
paying that rate?
- what would the payment be if the the
interest rate were higher/lower than it
is today?
- What fees will I need to pay to get your mortgage?
|
| Other
Information |
If you choose a fixed rate
remember the rates will usually go up at the end
of the fixed period. Make sure you will be able
to afford the repayments at the end of the fixed
period even if interest rates rise. The lender
may want to charge you extra if you want to switch
to another fixed rate at the end of this one.
Most lenders will lend you an amount based on
your salary (and partner's). Don't forget you
will have to pay other costs involved in buying
a home - the valuation fee and perhaps a structural
survey fee, a fee for additional security arrangements
if you want to borrow a high proportion of the
property price, legal expenses, stamp duty, Land
Registry fees and the costs of moving in. |
| |
| Q2.
How can I tell which mortgage rate is best for me? |
- Ask what is the Annual Percentage Rate (APR)
on this mortgage?
- now
- what will happen to the rate you have
advertised once the discount period (if
there is one) ends?
- Do you work out interest every year or every
day?
- Does your interest rate change when the Bank
of England base rate changes? Or does it follow
some other rate?
- do you change yours straight away or
wait?
- have you implemented the full interest
rate change from last time?
|
| Other
Information |
| You should
shop around for the best deal. The APR should
help you do this. Generally the lower the APR,
the better the deal but watch out - some lenders
advertise mortgages as if the initial low start
rate will last throughout the loan when in fact
it is almost certain that it will increase once
the discount period has ended. Nor does the APR
take account of redemption penalties.
If interest is worked out every year rather than
every day you pay interest on money you have paid
back (if you have a repayment mortgage).
Some lenders do not pass on the full amount of
savings when the Bank of England cuts interest
rates straight away (equally, the lender may not
pass on the full increases in rates, or at least
not straight away). It is unlikely that the lender
will give you a definite answer on this one, but
it is worth seeing what they say.
|
| Q3.
What is the best type of mortgage for me? |
- Ask what the jargon means:
- what does fixed rate, variable, discounted/low
start, flexible mean?
- Will this mortgage suit my circumstances
now and in the future (describe them)?
- exactly how will it do so?
- is a 25 year mortgage the best one for
me in those circumstances?
- How flexible will the mortgage be if my circumstances
change?
- can I increase, decrease or suspend payments
if I need to?
- so are there any limits on what I can
do?
- are there any penalties?
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