Buying a house is the largest single investment that anyone ever makes. It is an enormous emotional and financial commitment you must live with for some 25 years.
Choosing a mortgage to finance your dream home used to be a simple matter – there was no choice, and you simply paid back the money over the loan period. Now, with hundreds of different mortgage products available, and the chance to change suppliers as often as you need, having a mortgage can cost you a lot less than it did in the past.
The first thing to consider when changing your mortgage supplier is whether there is a penalty charge to pay for early completion. Some companies charge this fee to discourage customers from transferring their balance, although it is worth bearing in mind that you can usually save far more than the cost of the fee in reduced payments.
The best place to compare mortgage deals is on the internet. Most banks and lenders offer an online calculator to give you an indication of what your repayments will be on your new loan. Use these to shop around.
There are many different types of mortgage to choose from, variable, fixed, interest only, tracker, and more, and each of these will have a different repayment schedule, along with costing more or less over the term of the loan. Also, each of the different mortgage variations will have implications in how the money is paid back to the bank: whether you repay the capital as well as the interest for example.
Once you have selected the kind of mortgage that you want – for example one that offers a discounted interest rate for a fixed period of time, check whether there are any penalties imposed for early repayment – after all, you might want to change to a different supplier again in the future.
The mortgage company might insist on having the same surveys and searches done that you had when you bought the house in the first place, and the release of monies may depend on having some work done.
The final stage is to instruct your new lender to pay off the outstanding balance on your existing mortgage and arrange for transfer of the deeds. Then you will just continue repay your home loan to a new lender for the duration of the mortgage. Saving money along the way!
Malik Ashgabat is an independent financial consultant and advisor. He offers a wealth of financial resources and services online at 2-Save. To get more information about mortgages and other products, visit his site. |
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