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Understanding your mortgage offer: What to check before signing

Buying a home is one of the biggest emotional and financial commitments you will make. Therefore, you will need to understand the ins and outs of your property buying journey – legal or otherwise.

Although your estate agent will assist you throughout the process, it’s important that you’re aware of the fundamentals of your mortgage to ensure you’re getting the best possible deal, especially when you come to sign your mortgage offer.

In fact, research by online mortgage broker Trussle revealed that two thirds (61%) of homeowners admitted they didn’t read their mortgage agreement in full before signing it.

What’s more, 50% of homeowners said they didn’t understand all of the terminology used when buying a home, underlining how complicated the home buying process can be for some homeowners.

With this in mind, here at 99home we list four crucial things homebuyers should review and understand before signing along the dotted line.

Overpayments allowance

It’s advisable to check if your mortgage allows you to make overpayments. This will shorten the term of your mortgage allowing you pay off the loan sooner – reducing the overall amount of interest you’ll pay to a lender.

Most fixed deals will allow overpayments of up to 10% of the balance each year without you being charged early repayment fees.

However, while overpaying can be helpful, try to avoid putting everything you have into overpayments and keep a buffer of savings for a rainy day.

Risk warnings and conditions of the mortgage

Risk warnings, which are included in some mortgages, may affect your mortgage repayments – for example, if there’s an interest rate rise.

These warnings are always listed on your agreement, however, so ensure you are familiar with these in case you are exposed to these risks in the future.

There are different conditions for every lender: some will require you to have buildings insurance, or they may ask that any credit commitments be paid on completion, so be aware of these before agreeing to the offer.

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Portability

One key aspect that you should look for in your agreement is whether or not your mortgage is portable. This means being able to take your existing mortgage deal on your current property and transferring it to your new home, should you decide to move within your mortgage term.

This involves repaying your existing mortgage on the sale of your current property and resuming the mortgage on the same terms with your new property.

The end date

Mortgage deals aren’t infinite, so check the date that your mortgage ends so you can know when to start looking for another deal.

The last thing you want is to fall onto the lender’s Standard Variable Rate, as this can be costly. Make sure you avoid this by switching to a better deal at the end of your fixed term.

Lastly, you need to take note of the expiry date of your mortgage offer. If you don’t complete before that date, you must apply for an extension.

Here at 99home, we can assist you with the buying process. To find out more about the services we offer, please get in touch with us on 0203 5000 999.

If you’re selling before you buy, why not get a free instant online valuation to find out how much your property could be worth on the current market?

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