A mortgage could well be the biggest single debt you take out in your life. It’s therefore advisable to be strategic in everything regarding it. With that in mind, here are six mortgage mistakes you should definitely avoid.
Not keeping a watch on your credit records
Your credit records basically give you an insight into how lenders are likely to perceive you. Even if you think it’s in good shape, you should still keep an eye on it. Mistakes can happen and if they happen to you, you want to give yourself time to get them sorted before you need to reference your credit score.
Sadly, fraud can also happen. Seeing an unexpected entry on your credit score may be a sign that you’ve been the victim of identity theft. You should definitely investigate this quickly.
Not keeping your paperwork in order
It’s generally advisable to keep your financial and legal records in good order. This can make your life much easier. What’s more, if anything does happen to you, it can make life a lot easier for other people. Something happening to you doesn’t have to mean your death. It could just mean illness or injury putting you out of action for a while.
When you do come to buy a home, having your paperwork in order can allow you to speed through the application process. If you’re also selling a home, then having your property documentation in good order can help to speed up the conveyancing process.
Not remortgaging at the end of your mortgage term
You may plan to have a mortgage for 15-25 years. You don’t, however, need to have the same mortgage for 15-25 years. If you take out a mortgage with a fixed-term deal, then you should be looking at alternatives for when that deal ends. You don’t necessarily have to take those alternatives. You do, however, need to know what they are to make an informed decision.
That holds true even if your finances have been hit by the pandemic. You may think that, currently, you wouldn’t be accepted for a new mortgage deal. In fact, you might be right. You’ll only know for sure, however, if you check and check thoroughly. Consider enlisting the help of a mortgage broker.
Remember, even if you genuinely can’t remortgage now, you can at least get an idea of what’s out there and what you need to do to qualify for it. That will give you something to aim for.
Not looking at niche lenders
The big names do not necessarily offer the best deals. They may do but, again, you’ll only know for sure if you check. Tracking down niche lenders by yourself can be a bit of a struggle. This is another argument in favour of using a mortgage broker.
Not factoring in fees
There are two sets of fees you need to consider when looking at mortgages. The first is set-up fees and the second is exit fees.
Set-up fees are guaranteed to be charged, you, therefore, need to factor them into your calculations when working out the overall cost of a mortgage. This is the only fair way to compare different mortgage deals. If you’re planning on adding the fees to the loan, then you also need to factor in the cost of the interest.
Exit fees will only be charged if you exit the mortgage early. It is, however, still important to know what they are. You may not plan to exit the mortgage early but your plans may change.
Not calculating your deposit accurately
When calculating how much deposit you can really afford, remember to think about all the expenses of moving home. Then add a bit extra for unforeseen expenses. Then add a bit extra on top in case of unrelated emergencies.
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