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Ten Important Questions To Ask Your Mortgage Loan Broker
Copyright (c) 2007 James Copper
Any Loans UK
http://www.any-loans.co.uk
When looking for a mortgage in todays market you are swapped with
information, products and deals. This can make the whole process
very daunting and confusing. For this reason it is good to be
prepared with a set of questions to ask your mortgage broker, so
that you do not get ripped off and you know where you stand.
1. What are different types of mortgages and in what way do they
work?
There are a mass of different types of mortgage products on the
market, so make sure that your broker explains the differences
between the different types of mortgages and how they can benefit
you. For example may lender these days offer fixed rates,
discounts and cashback over a number of terms. Also make sure
that you get an outline of the varying ways of paying the capital
off. This at first might seem to be a complicated area, but once
you have the basics explained everything will become a lot
clearer and you will start to see how different products will
suit your personal circumstances better than others.
2. What is the Annual Percentage Rate (APR)?
In accordance to regulations the APR is meant to appear in all
adverts alongside the headline mortgage rate. The APR is used to
provide customers with the true cost of loans and empower them to
be able to compare different deals. Do remember that APR is
unreliable and is no substitute for personal prepared quote that
outlines all upfront and ongoing costs.
3. What is the interest rate that I will be charged?
In the cases of fixed, capped or discount rate then your broker
should tell you what the initial rate you will paying and how
long you will be on that rate for.
4. So what happens at the end of the fixed or discount rate
period?
It is important to know what will happen when your fixed or
discount rate period ends. Will you be switched on to the
standard variable rate or will the lender offer you another
discounted or fixed rate deal. Also remember remortgaging is a
good option.
5. Standard Variable Rate. What is that?
Because house prices are at a record high many people (probably
including yourself) are now thinking of their mortgages in the
long term as well as the upfront rate. For this reason it is
worth knowing what current customers are paying. It is highly
unlikely that when you come to the end of your fixed or discount
rate period you will be on the same SVR as current customers. But
you can use the information to see how the lender compares
against others in the market.
6. What are the Early Redemption Charges or Early Repayment
Charges attached to the product?
Most mortgage deals will involve some kind of repayment charge.
So you will have to a fee to the lender if you repay your
mortgage early or switch to another lender within a set time
period. Make sure you find out precisely what you will have to
pay and what would happen if you moved home during the mortgages
term.
7. What will my monthly payments be at the quoted interest rate?
Your broker should tell you exactly what your monthly payments
are going to be. They should also tell you what you would be
paying at the SVR as to give you an indication of what you will
be paying after your products term comes to an end. Get the
broker to work out the payments on interest rates of up to 11% as
well. This way if the interest rates rise substantially you will
be able to see if you can afford the mortgage.
8. Are there any other conditions attached to the mortgage?
Different lenders will have different deals, incentives and
clauses. Lenders will offer better discounts, fixed rates or
cashbacks if you are prepared to take the lenders building and
contents insurance. This is something that will be worth
considering. Just make sure that you are informed about the terms
and what would happen if you moved your insurance cover.
9. Are there any Higher Lending Charges?
With some lenders there may be a Higher Lending Charge (HLC) if
you are borrowing more than a certain amount of the value of the
property. Make sure you know what the charges are and how much
the fees are. Some lenders will add HLC charge to the loan others
will charge it upfront.
10. What are the arrangement or broker fees?
Your broker should tell you about every payment you will have to
make to arrange your mortgage. This will give you an idea of the
whole cost of the deal rather than just an upfront rate. This
will also allow you to shop around and find the best deal.
So next time you are looking for a mortgage make sure you have
these ten questions to hand.
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James Copper enjoys writing on all areas of personal finance.
He is a Loans Broker for http://www.any-loans.co.uk
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