1. Only speak to one lender for your deal
The classic mistake made by some borrowers is to go straight to one lender when they need a mortgage – usually their banking provider.
Failing to shop around, do any research yourself or visit an adviser is the best way to end up with a deal that the rest of the market can probably wipe the floor with.
2. Fall marginally into an expensive LTV bracket
What you really don’t want to do is tip just the wrong side of a lender’s loan-to-value (LTV) bracket, because it can make your monthly repayments much more expensive. The bigger your deposit the cheaper the mortgage. Is there is any way you can muster the extra money to tip you into the preferential LTV bracket you could bag a much more competitive mortgage and save yourself a fortune.
Fall just the wrong side of a lender’s cut-off point and it could cost you dearly.
3. Choose the lowest interest rate
If you want to increase your chances of making a major mortgage mistake simply choose the mortgage with the cheapest rate. This doesn’t mean that they are the best mortgages for you though. The lowest rates can tend to come with high fees, and they are only available to those with the biggest deposits.
4. Ignore your own personal circumstances
Many borrowers are keen to get THE BEST MORTGAGE and they think it’s a cop out when experts tell them there isn’t one. But there really isn’t one. Not so long ago, for example, tracker and variable mortgages were derigueur because they were cheaper than fixed rates, plus with interest rates expected to stay low, they didn’t present too much risk. But for a family that absolutely cannot risk a rise in their repayments, variable rates may not be as suitable as a fixed rate.
Ignore your own personal circumstances and follow the mortgage crowd at your peril.
5. Forget to read the small print
Mortgage small print can be complex, boring and long. But it is important, particularly the Key Facts about your Mortgage document. Read it cover to cover, more than once, make sure you understand it. If you don’t, ask your lender or mortgage adviser to explain it to you.
Know what your repayments will be, initially and at the end of any deal. Can they rise in line with interest rates, and by how much? How much is your mortgage fee? When is it payable and is any of it non-refundable if the deal falls through? Does the lender impose a Higher Lending Charge? It might sound like jargon but it can cost you dearly. If you choose your own surveyor, do you still have to pay the lender for a valuation from a firm they approve of?
This article aims to give information, not advice. Always do your own research and/or seek out advice from a regulated broker before acting on anything contained in this article.
Warning: Your home or property may be repossessed if you do not keep up repayments on your mortgage or any loan secured on it.