What to Ask Your Mortgage Broker
As you may have already discovered, choosing a mortgage is quite a complicated business. There are so many pros and cons to weigh up in each case.Your mortgage broker has the expertise to help you find the mortgage that’s right for you. But you may find you don’t even know what questions to ask your mortgage broker in the first place!
To start you off, here are some questions you can ask your mortgage broker!
• Can I take payment holidays? Sometimes it really helps to take a payment holiday – for example if you are going through a difficult time, like redundancy or divorce. It’s a good idea to check with the mortgage broker what the lender’s policy on “holidays” is. Of course, if holidays are allowed, they will have to be paid for by recalculating the interest over the course of that year. Some lenders charge a penalty or a fee in addition.
• Is there a restriction on overpayment? It can be helpful to overpay your mortgage if you can manage it. But lenders don’t always like it, as obviously you pay off your loan more quickly, which means less interest for them! Some lenders put restrictions on the amount by which you can overpay – for example a maximum of £500 per month, or 10% of the outstanding capital in a year. Plus they may impose swingeing penalties if you exceed this amount! If you think you may want to do this, ask the mortgage broker to find you one that doesn’t impose restrictions – or consider an offset or current account mortgage.
• If the mortgage is a special deal, are there extended redemption penalties? Most mortgages with special deals – such as fixed rate or discount rate – come with an early redemption penalty – that is, you will be charged a fee for repaying earlier than specified in the deal. For instance, if it’s a three-year discount rate, you would be charged a fee for repaying within the three years. However, some lenders also impose extended redemption penalties, where they continue to charge the redemption fee beyond the stated period. They can slip this past you if you’re not careful, so remember to check it with your mortgage broker.
• Is the interest calculated daily, or on an annual basis? When lenders talk about “daily” interest, they mean that every time you pay off part of the loan, the interest is recalculated on what is left. Obviously, this is better than the interest only being recalculated every year. This means that, when you are choosing a mortgage, it’s not just the interest rate you should be looking at, but whether it’s calculated daily or annually. A slightly higher rate on which interest is charged daily, is better than a slightly lower rate where interest is charged annually. So it’s important to check this out with your mortgage broker before taking out a loan.
Your mortgage broker is there to assist – but it does help to know what questions to ask!
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