Advise needed - FTB

anuarun

Hiya!!!

I'm a FTB and finally found a house that i like.Now i need to get my mortgage sorted.

What are the various charges i need to look out for before i accept a mortgage?

Please advise,

Regards,
AA

AndrewSmith

Hi,

There are a number of charges / costs associated that you will need to consider. Some will depend on the lender you use, some will depend on the amount of deposit you have to put down, against the purchase price.

Without knowing either it is difficult, so I will just list the generic charges usually encountered with a mortgage. If you give some more detail then I can be a littlemore specific for you

Here goes:

Valuation (basic survey) £250-£450. Paid upfront.

Arrangement / Booking fee (charged by the lender) £399-1.5% of the loan. This can usually be addeed to the mortgage, thus you do not pay it upfront, however it then becomes part of the 25 year mortgage.

High Loan to value fee. If you borrow over 75% of the value of the property, the lender will require and indemnity insurance against financial loss should they need to repossess the property. It is a policy that you pay for, but is for the benefit of the lender. Up to 90% loan to value, the lender will usually pay for this for you. Above 90% you will generally have to pay for it. It is charged as a lump sum and added to the mortgage. The calculation re cost differs from lender to lender, however the average on a 95% mortgage of £150,000 is about £2,500. SOme lenders don't charge it at all, such as C&G, Nationwide, Norwich & Peterborough and so on.

Early redemption Penalties. If you take an incentive rate, ie fixed, for the first couple of years there will usually be a tie in for that period. If you decide to change mortgage comapny within this time you will be charged an Early Redemption Penalty, again this varies from lender to lender. Make sure that you do not go for a mortgage with tie in's after the initial incentive period.

Deeds release fee / exit fee. All lenders will charge you this fee when you do change mortgage company or pay the loan off. Ask your broker to compare each lender's fee with each other.

This is not an exhaustive list, but should be enough to go on with.

Ask your broker to show you a true cost comparison, taking into account all the possible fees payable and the conditions of the different mortgages with the different lenders.

You may find that the cheapest rate is not necessarily the best mortgage for you.

Hope this helps

Andy