Did you know that 50% of all 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, which means 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 review before signing:
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’re correct. Once you’ve signed, it’s 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, 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, and as such, you should review them to make sure they meet your needs.
Overpayments Allowance
If you’re in a position to make overpayments on your mortgage, make sure you’ll be able to do so without incurring fees.
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.
Mortgage Portability
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, it’s worth checking as it could save you money down the line.
The End Date
When the introductory period of your mortgage ends, you’ll be switched onto the lender’s standard variable rate (SVR). This often means that your monthly repayments will increase drastically, so make sure you know when to start looking for a new deal.
If you keep on top your mortgage as you would your energy bills or car insurance, you’ll never pay more than you have to again!
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’s 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.
