Mortgage Tips

Don't take the first mortgage you're offered: There are big differences in the deals you can get amounting to many thousands of pounds. So make sure you've made comparisons with others.

Shop around: There's a lot of competition between the mortgage providers. Look for a mortgage lender who is offering a "loss leader". Provided there's no overhanging lock in you could shop around for another good deal at the end of it and save thousands.

Don't be taken in by a low sounding initial interest rate: This is known as the headline rate. Very low rates usually come with cunning long term "tie ins". What will happen at the end of the low interest rate term? Do you have to stay with the same mortgage lender who is suddenly only offering you a very uncompetitive rate unless you pay a big penalty (see below) to leave? 

Don't tell any lie: If you lie - eg about a bad credit history - it will very probably be spotted by the mortgage lender and screw up your chances of a mortgage. Honesty is the least complicated and best policy. There are ways you can successfully get a mortgage if you've got a Bad credit history.

Beware Redemption Penalties: When you take out a mortgage you have an agreement with the lender. This covers the amount you repay and is set for a particular period. If you want to get out of this deal before the three years is up you'd probably have to pay a redemption penalty. This is a charge which supposedly compensates the mortgage lender for the time and expense of your leaving. Some lenders may try to hide the redemption penalties in the small print.
Simply ask your prospective lender what the exit / redemption penalties are. If you're not sure what they mean ask them to spell it out. If you still don't understand you can take it that there's something they might be trying to hide so walk away.

Small is beautiful: Building societies often give a better deal than the banks. The smallest building societies you may never have heard of can offer the very best rates.

How to save thousands by getting a shorter mortgage term: Normally buying a home will cost you two or three times the price you paid. This is because of the effect paying interest has on your mortgage repayments. If you pay more every month you'll end up paying much less in interest. Sure, your monthly repayments will be higher, but the overall cost will be hugely lowered.

Compare Three Mortgages: Use the following yardsticks:

• Compare all the fees charged.

• Is there an application fee?

• Will the mortgage lender pay for the Valuation? 

• Is Mortgage Indemnity Insurance compulsory? (This type of insurance only insures the mortgage lender and not you). If so, how much is it costing you?

• Is the interest on your mortgage calculated at a daily rate? (This is much better for you than if calculated annually).

• What is the redemption penalty ie what will you have to pay as a penalty for leaving during the agreed timescale of the deal.

• If you secure a special deal is there any further penalty for leaving after it's come to an end - ie an "overhanging lock in".

• Check the mortgage lender's usual variable rate. How does it compare to the market? If it's higher avoid them because this is what you'll probably end up paying after the special deal is over (if, like most people, you forget to move mortgage lenders). 

• Consider carefully how competitive is the total cost and terms of the mortgage.

Consider using a Mortgage Broker: Many people use brokers for convenience. They'll do the legwork for you and often it costs you nothing extra because they're happy to do it for the fee they'll get from the mortgage lender. However do note that some lenders try to save money on paying fees to brokers by giving you a better deal if you go direct. However, all you have to do here is take the best quote from a broker and use it for comparison with mortgages you can buy direct.