- Read all the small print. For example make sure you can leave the mortgage deal without incurring any excess penalties.
- Choose the right mortgage for your circumstance. For example if you have a large current account surplus you should seek to make use of this positive balance and get a current account mortgage. This is a kind of mortgage where if you have savings in your current account they are automatically used to reduce your mortgage debt. This saves mortgage interest payments and also saves paying tax on your savings; – a double benefit. This is sometimes known as an offset mortgage.
- Which is more important money now or money in future? There is often no “right” mortgage, it may depend upon your preferences. For example if you were to take out a 50 year mortgage the standard industry response would be to discourage you; on the basis you will end up paying more interest over the long term. However if it means you can get on the property ladder it is probably a better financial decision than renting. However if you have a low pension you will want to get a short mortgage term to enable you to pay off your mortgage early. Then in your retirement you will have low living costs.
- Look for best Remortgage Quote. Most mortgage lenders make their highest profit margins on their existing customers. This is because existing customers stay on the Standard variable rate. However if you seek to remortgage they will probably offer you a much better deal.
- Be careful of enticing offers. In an increasingly competitive market many mortgage dealers offer a special discount for the first 6-24 months. These interest rates can be as low as 3%. However if you look closely after the allotted time period ends the mortgage will suddenly jump up to say 7%. Also these mortgage deals often have high penalties for early leaving. When getting mortgage quotes make sure you look closely at all the detail. Make use of impartial advice of a mortgage adviser.
- Protect your credit rating. Work hard to avoid missing any credit card payments or mortgage payments. Set up direct debits. If you do miss a payment try to explain to the bank it was a mistake, get lost in the post. Customers with bad credit can get a mortgage but they will end up paying a mortgage premium.
- Claim exit fee refund. In the UK if you have remortgaged in the past 2 years you are probably entitled to a refund. The FSA decided the mortgage lenders had increased their exit costs without sufficient justification. If you write to the bank you will probably get a refund of upto £200.
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