Choosing a mortgage
Understanding The Product
Before committing to a mortgage, it is wise to be in a
position where you fully understand the product and know
exactly what you are buying. Here is a list of questions
to ask about yourself and the mortgage, which will help
you identify any areas you have not yet thought about:
Type of mortgage:
Have you chosen a method of repaying the mortgage?
Is this mortgage available with your chosen repayment vehicle?
What is the starting headline interest rate?
What is the APR?
What will be the total interest repayments?
How much will your monthly payments be?
Is this mortgage available for the loan-to-value rate that
you require?
How often is interest calculated on the outstanding balance?
Do you fully understand the type of introductory offer,
if there is one?
How long does the introductory period run for?
What will happen to the rate after the introductory period
is over?
How will this affect your repayments?
How often is the rate reviewed and amended for changes in
the base rate?
Does the lender use some other measure to decide when to
alter its rates?
Do you have a strong opinion regarding what is likely to
happen to rates in future years?
How will your mortgage be affected by these changes?
Will you be able to cope if the rate rises and your repayment
rises with it?
This type of mortgage may fit your circumstances today,
but are your circumstances likely to change?
If so, is the mortgage flexible enough to cope with the
changes?
Product features:
Will you have to pay an application fee?
If so, how much?
Will you have to pay an arrangement fee?
If so, how much?
What are the MIG fee thresholds?
Will you have to pay it?
If you must pay, how much will it be?
Can you add it to the loan?
How much more would you have to save to cross the next MIG
threshold?
How long does the redemption penalty period run for?
How much will you be penalised if you repay your loan within
this time?
Does the penalty period last longer than the introductory
offer?
Do the penalties apply to part repayments?
Is the product portable?
Can you take payment holidays?
Is it possible to increase or reduce your payments?
How often can this be done?
Can you pay off additional lump sums?
Is there a minimum amount?
When are these payments credited to your account?
Are you allowed to extend or reduce the term of the repayment?
Is there a facility to obtain further advances?
When can you start doing this?
Are there any conditions attached?
What will the rate of interest be?
Is there a full current account facility?
Are any ancillary products required?
Can you choose your own provider or do you have to take
the product supplied by the lender?
Is it a CAT marked mortgage?
What incentives are there with the mortgage?
Is there any cashback?
The lender:
Will they lend you as much as you need?
Does the lender comply with the mortgage code?
Is the type of property you are buying acceptable for this
mortgage?
Will you meet their standard lending criteria?
Will you need a guarantor?
Are the payment terms flexible enough?
Are you happy with their policy on how they handle late
or missed payments?
Have you seen the schedule of other charges?
Do you understand what they all are and when you would be
required to pay them?
How long will it take to process your application?
Are the advisers or customer service staff efficient and
helpful?
Is the sales and product literature clear and easy to understand?
If you can't answer all of these questions, then you probably
need to either do a little more reading of this site, or
investigate the product or lender some more.
