50% of homeowners say they found the process of buying a property confusing and over 60% admit to not fully reading their mortgage agreement before they signed it. Crazy! A mortgage will likely be your largest financial commitment, so it’s vital to ensure that you’re happy with the terms of your mortgage agreement before you commit to it.
Here are a few things you should always do before signing your mortgage agreement.
Double-check the details
Before you put pen to paper, take some time to read through the details of your offer to make sure they are correct – once you’ve signed, it will be too late.
The most important things to look out for are:
- Loan amount
- Length of term
- Monthly repayments
- Additional fees
Mortgage conditions and risk warnings
If your mortgage repayments are vulnerable to interest rate changes, your mortgage agreement may include risk warnings. These warnings are to inform you of potential situations you may find yourself in if rates rise in the future. You should discuss these with the lender or a mortgage advisor so you’re sure you’ll be able to make the repayments, even if circumstances change.
Every lender has their own set of general mortgage conditions. Some (such as the requirement for buildings insurance) are standard but most will depend on the lender. As such, you should review them to make sure they meet your needs.
Most fixed deals allow you to overpay by 10% of your outstanding balance each year. This is great, as any overpayments will shorten the overall mortgage term and reduce the interest you pay to the lender.
If you’re in a position to make overpayments on your mortgage, make sure you will be able to do so without incurring fees.
You might not be thinking about it right now, but what if you want to move home within your mortgage term?
You can avoid paying early settlement fees by moving your mortgage over to the new property, if this is something the lender allows. Even if you’re not actively considering moving again, this is worth checking as it could save you money down the line.
The end date
When the introductory period of your mortgage ends, you will be switched over to the lender’s standard variable rate (SVR). This often means that your monthly repayments will increase drastically unless you move on to another deal. Your lender will usually give you a few weeks notice of the change so that you can take action in good time.
TOP TIP: If you keep on top of your mortgage as you would your energy bills or car insurance, you’ll never pay more than you have to.
Remember, a mortgage offer is a binding contract between you and the lender, so it’s essential you read and review everything in the document to make sure it is correct. If you’re unsure of any details or the language used in your offer, speak to an advisor or the lender before signing it.
Arrange your free mortgage consultation
If you have not yet applied for your mortgage and would like advice on what products would be most suitable for you, we offer a free consultation to all new mortgage clients. Ask your usual RfM advisor for a referral to RfM Mortgage Services or contact Sharon Rigden on 01772 431233 or email@example.com.
RfM Mortgage Services is a trading style of Key Mortgage Advice Limited who is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register No 312930 at register.fca.org.uk/
Think carefully before securing other debts against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage
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