New research from online mortgage broker Trussle reveals that a shocking 50% of homeowners admitted to not understanding all of the terminology used when buying a home. Almost two thirds (61%) of borrowers admit they don’t read their mortgage agreement in full before signing.
With this in mind, Dilpreet Bhagrath, Mortgage Expert at Trussle highlights five things homebuyers should always review and ensure they understand, before signing a mortgage offer.
Check and double check
It may seem obvious but take extra care to review the details of your offer to make sure it’s correct. It’s shocking to see how many don’t read their mortgage agreement before signing! Important things to look out for include: loan amount, term, monthly payments, product and fees.
Any overpayments made into your mortgage will shorten the term and allow you to pay the mortgage off sooner. In turn, this reduces the overall amount of interest you’ll pay to a lender. Most fixed deals allow overpayments of up to 10% of the balance each year without being charged early repayment fees.
While overpaying into your mortgage can be great, homeowners should avoid putting everything they have into overpayments and keep a buffer of savings for a rainy day.
Risk warnings and conditions of the mortgage
Some mortgage offers include risk warnings which may affect your mortgage repayments, for example, if there’s an interest rate rise. These warnings will be listed on your mortgage agreement so make sure you are familiar with these in case you find yourself in this situation in the future.
Every lender has different conditions so it’s worth reviewing these to make sure they work for you. Lenders state that you must have buildings insurance, or they may ask that any credit commitments must be paid on completion, so be aware of these before agreeing to the offer.
Portability of the mortgage
Further down the line, you might consider moving home. Check the portability of the mortgage to see whether you would be able to move your mortgage over, should you decide to move within your mortgage term.
The end date
Mortgage deals don’t last forever, so check the end date of your mortgage so you know when to start looking for another deal. Falling onto the lenders’ Standard Variable Rate can be costly, so avoid this by switching to a better deal at the end of your fixed term.
Dilpreet Bhagrath, Mortgage Expert at Trussle adds: “Buying a home is one of the biggest emotional and financial commitments you’ll make in your lifetime. And it’s important to take it seriously. A mortgage offer is a binding contract between you and the lender, so it’s essential you read and review everything in this document to make sure it’s correct.
If you’re unsure of any details or the language used in your offer, always speak to your broker or lender before signing it.”
Find more information on how to prepare for your mortgage, please visit: https://trussle.com/blog/post/five-simple-ways-to-prepare-for-your-next-mortgage