10 Key Mortgage Questions
Ten questions you should ask before taking on a mortgage
Are there any redemption penalties?
If your mortgage offers a discounted rate for the first year or years, it is likely you'll have to pay a redemption penalty if you pay off your mortgage. This is to protect the lender and ensure that they don't lose money if you switch mortgages after the discounted period. Check how big the redemption penalty is, and how long it applies for, or you could find yourself trapped in a poor value mortgage a few years down the line.
Does this mortgage come with compulsory insurance?
It is a condition of most mortgages that you take out buildings insurance to cover the full value of your home. However, some lenders go further and require you to take out insurance through themselves or their associates. Ask whether or not this is the case - you can probably get a better insurance deal by shopping around.
What other charges will I have to pay?
All charges should be spelled out clearly before you agree to a mortgage. It's a good idea to ask for written confirmation of all charges just in case, to avoid any nasty surprises.
What happens if I can't pay?
Most people unfortunately experience temporary financial difficulties at some point, and some lenders take advantage of this by charging very high fees if you miss a payment or fall behind. Ask what these charges will be, and if there's an option to switch to an interest-only deal for a short period if needed.
What about the small print?
During your mortgage application process you will probably be sent a lot of paperwork. While it might seem overwhelming, it is vital to examine the small print on everything you are sent, and query anything you're unsure about. Mortgage lenders aren't dishonest (at least, the vast majority aren't!), but misunderstandings can arise. Make sure you're clear about what you're committing yourself to.
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