4 Questions To Ask Yourself Before Applying For A Mortgage

4 Questions To Ask Yourself Before Applying For A Mortgage

There are a lot of things to consider before applying for a mortgage, whether you are a first-time buyer or a current homeowner. It is most likely the largest financial commitment you will ever make, so be sure to ask yourself these questions before you apply:

What Happens If The Payments Go Up?

If your interest rates where to change, could you still comfortably afford your mortgage payments? This is something to seriously consider when looking at tracker or discounted rates. Interest rates can be affected by many different factors, leaving you with increased payments at very short notice.

While a fixed rate mortgage may sometimes start out more expensive, having the peace of mind when it comes to your monthly expenses can make it worth the extra cost.

What Are The Arrangement Fees?

Be sure you know all the additional costs. Many times, buyers don’t factor fees into their budget and it can leave them in a tight spot.

Can You Leave Or Make Additional Payments?

Check the tie-ins thoroughly. Many mortgages come with Early Repayment Charges that can potentially kick in even if you just want to make additional payments. Most lenders will only allow you to overpay by up to 10%. ERCs are often at the same percentage as the outstanding borrowing with the percentage then decreasing each year of the deal meaning that it can be more expensive to leave your mortgage in the second year of a 5-year deal, than in the fourth year.

Carefully consider your long-term plans before tying yourself into any deal.

What About My Savings?

While most first-time buyers will have raided their savings for their deposit and fees, if you are already a homeowner with re-established savings consider using these to reduce your mortgage.

While it is impossible to predict future trends in the property market be sure that you ask yourself these questions and discuss them at length with your mortgage broker. They will be able to advise you on the best mortgage for you, where you are now.

As always, we hope this helps! For more information on how ABC Mortgages can help you with your mortgage needs you can contact us through the information below.

Thanks,
Bill Muir
ABC Mortgages