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Choosing Your Mortgage

We are not here to sell you a mortgage, or life insurance, so relax. Over the years we have made ourselves unpopular with lenders locally, by pointing out to our mutual clients the sometimes woeful arrangements proposed by the lender. Our belief has stayed constant: that you should keep your mortgage as simple as possible.

Here are our rules.

Put as much down as deposit as you can. It may mean that the new kitchen comes a few months later, but the higher the ratio you borrow, the higher the risk to the lender, and the higher the cost to you.

Borrow the money, and pay it back. Stay clear of interest only arrangements.

If you want life insurance, get it independently of the mortgage, in an amount which makes sense for your own life, and on the lives for which it is needed. It is usually very much cheaper to do it this way. The amount borrowed is a significant but not a determining element in this.

If you want to save money up, do so, but do not combine it with life insurance.

Acknowledge that the only real reason for combining any two financial products is to hide from you the true cost or return.

For every rule there is an exception. You may be that exception, but depart from the rule only if you are quite sure of why you do so.

Accept nobody's word. Certainly do not believe the nice young man from the estate agency, or the nice young lady from the lender. Do not even just accept what we say. Listen to what they say. If you do not completely understand it, ask and ask again until you do understand it. When you understand it, make up your own mind, and act accordingly. These are huge sums.

Be careful that you understand fully the penalty clauses which attach to any early repayment of the loan. Your circumstances are likely to change.

Be very careful with low start mortgages, interest rate caps and fixed rates. Interest rates can go down and up, and many people take out loans which they will not be able to afford when the early 'come on' finishes.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
All information on this site is in general and summary form only. The content of any page on this site may be out of date and or incomplete, and you should not not rely directly upon it. Take direct professional legal advice which reflects your own particular situation.
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18 October 2013 http://www.swarb.co.uk/lawb/cvrChooseMortgage.shtml 194 18 October 2013