Mortgages – Some Important Points You Need To Consider
There are many potential perils and pitfalls that a borrower can face when buying a home and taking out a mortgage. Many borrowers can fall foul of these perils due to misinformation or a misunderstanding.
Read on as we try to discover some common pitfalls facing the potential mortgage borrower.
Interest Only Mortgages
Interest only mortgages are becoming increasingly popular, especially with first time buyers looking to take that first step onto the property ladder. Although having an interest only mortgage will result in lower monthly repayments, it will not however pay off any capital owed on the mortgage.
Interest only mortgages do have there place in the market and can be extremely useful in times where money is very tight or when there is an investment vehicle in place to repay the outstanding mortgage balance at the end of the term. For most borrowers however, interest only mortgages do seem to be a false economy – no headway will ever be made into reducing the balance owed.
On the whole, an interest only mortgage should only usually be adopted on a short term basis before reverting to a Capital repayment type mortgage.
New Build Enticements
Land is a precious commodity in the UK, especially in our densely populated towns and cities. In recent times, property developers have looked to seize upon every available scrap of land in order to service the need for new homes – and of course, to make a quick buck.
The need to fill these new developments as soon as they are constructed is big one – building contractors will commonly offer special deals in order to entice prospective buyers. Such methods to entice customers will include paid up stamp duty and full or partial deposit payment.
It is important to remember in many walks of life that if a deal looks too good to be true, then it usually is – builders and developers will often factor these costs into the actual price of the house or flat.
Dont Move Home On The Weekend
This is one tip that you may have heard before however it is one that is often overlooked – Dont move home on the weekend! Moving home on a Saturday remains the most popular time with people generally reluctant to take time off work. It is the busiest time to move and also the most expensive with many removal firms and van hire companies increasing their prices accordingly.
Attempting to move house on your own can mean the stress and hassle increases ten fold – although removal firms may seem to charge very high fees, moving without their help can often mean repeated trips and lots of strained muscles.
Trust Your Own Judgement
The house buying process and securing a mortgage, to many is a very daunting prospect. It is very important to stand your ground when it comes to sticking to budget – it is typical to put in an offer below the asking price to negotiate the best price, with most sellers expecting you to do so.
By the same token, if you are selling a property, it is not common for the seller to accept the first offer they receive in pursuit of the best price. Holding out for your favoured price can often pay dividends – it is often worth trusting your own judgements.
Shop Around For Insurance
More often than not is pays to shop around for insurance policies. When taking out a mortgage, it is common for the lender or mortgage broker to peddle insurance policies that they will arrange on your behalf.
For them this means extra commission! Insurance policies such as buildings and contents insurance, life assurance and mortgage payment protection insurance to name just a few. These policies can often be arranged at a cheaper premium if you are prepared to shop around for yourself!
Look Before You Leap
Taking out a mortgage with friends or a partner is becoming an increasingly popular way of buying a home. It becomes important therefore that if you do decide to take this big step, you must be confident that you are going into it with someone you know and trust.
Relationships do however turn sour at times and if this becomes the case, then sorting out your financial predicament will be an unwanted hassle – It is important to establish at the very start exactly what should happen if things go wrong and keep a record of who has contributed what. A consultation with a solicitor could prove to be worthwhile also.
Honesty Is The Best Policy
It always pays to be honest – this becomes particularly relevant in the case of arranging a mortgage or insurance policy. Dishonest or inaccurate information could leave an insurance policy worthless and dishonestly could be seen as a fraudulent offence on a mortgage application form.