Buying a home is a long and huge investment. You have to research and explore all options while buying a house and getting a mortgage. With numerous lenders available in the market, your options are multiplied and it can get challenging to choose from various available deals.

To help you choose the right lender and deal, here is an important questionnaire designed for getting you the best mortgage loans. Whenever a lender offers you a deal that excites you, ask these ten questions to it. A comparative study of the answers will guide you towards the best mortgage in the market for your house.

Question 1. Which mortgage would be best suited to my needs?

The lending market has expanded greatly over the years due to rising demand. This has proved beneficial for the borrowers since the escalating competition has given birth to more deals and lower costs.

Availability of deals for people borrowing 95% of their home’s value has soared to 304 different mortgages, up from 217 a year ago.

Lenders offer deals based on your mortgage amount, property value, deposit value and the repayment period. All the mortgage specifications are designed around these factors. Ask your lender which deal he thinks is the best for you.

Enquire about the various options you have and why he thinks a specific one is the most suitable for you.

Question 2. How much down payment would I need to make?

Most lenders ask you to pay a 5% minimum down payment on the value of the property. This acts as a deposit for your mortgage. You must ask your lender how much payment has to be made according to the mortgage you are taking out.

Your repayments also depend on the down payment you make, so study your mortgage carefully before deciding your choice.

Question 3. How much credit am I eligible to borrow?

The basic eligibility criterion of a mortgage is your 18 years of age and UK citizenship. Lenders do have some other conditions like having a bank account or a permanent residential address. Make sure you meet the requirements before proceeding further.

Eligibility for a loan does not necessarily convert to approval.

You can usually borrow up to 95% Loan to Value (LTV), or £150,000. Loans over £150,000 are approved on a case-by-case basis. Your mortgage approval directly depends upon your credit score and history. Generally, a clean credit history qualifies for the lowest interest rates.

Ask the lender about all the conditions and limits of the mortgage offered to you.

You can know more about the definition of a good credit score here.

Question 4. What would be the interest rate and APR offered on the mortgage?

This is a very important question you must know the detailed answer to. Make sure you understand all the calculations and numbers you are getting into.

Interest rates can be fixed or variable across the mortgage period. Be informed about both possibilities and payments.

You can also use online calculators to estimate what your interest rate and final loan amount would be. Have a conversation with your lender to explore and understand all prospects of your loan.

Question 5. What would be the charges for locking the interest rate?

The interest rates tend to fluctuate over the period of your mortgage, making you either pay more or less in repayments. You can pay your lender to lock the interest at a certain point which you feel is optimal for you.

Enquire your lender about the charges for locking that interest rate. The fee is usually between 0.5 to 2 percent of your mortgage. 

This may or may not be beneficial for you, since the rate may go either up or down in the market. It is the best to research market predictions before suggesting a rate lock.

Question 6. What would be the other additional costs involved with the mortgage?

Lenders have been known to charge some other upfront and additional costs, which you might be unaware of. It is strictly advisable to have knowledge of all the extra costs involved with your mortgage. You would want to avoid and plan for all surprise payments.

The most common charges include-

1 Stamp Duty

2 Valuation Fee

3 Surveyor’s Fee

4 Origination Fee

5 Remover’s Cost

6 Council Tax

7 Escrow amount

There may be other charges involved, but it purely depends on the lender and type of mortgage you opt for.

Question 7. How much would my monthly mortgage payments be?

It is necessary for you to realize that your budget in the upcoming years would revolve around your mortgage repayments. There would be a fixed percentage of your income that will have to be kept aside every month. This is a non-negotiable boundary that you are tied in while taking a mortgage.

Many homebuyers in the UK underestimate their monthly repayments and then face financial struggles while paying off the mortgage.

Taking the seriousness of a mortgage into question, be practical and sensible enough to decide what amount of money would you be entirely comfortable in accommodating in your budget.

The risk at stake makes it crucial to know your monthly mortgage payments amount beforehand.

Question 8. What about Mortgage insurance?

Mortgage insurance protects the lender from losing his money if you default on the mortgage. Generally, you pay for mortgage insurance only if your down payment is less than 20% of the property value. Paying more than 20% most likely expels you from paying for insurance.

The policy fee is included in your monthly payment and goes away once your loan-to-value (LTV) ratio falls below 80%.

Question 9. How much closing fees would be charged on the mortgage?

As a responsible borrower, you should make yourself aware of the answer to this question. You should not feel cheated or betrayed when you are asked to pay a huge amount in closing costs.

Usually, mortgage borrowers will have to pay around 2-5% of the property value in closing fees.

Closing fee is a collection of charges that you have to pay while finalizing the mortgage deal. Your lender must give you an estimate of your closing costs within 3 days of your application.

Question 10. How much time would it take to close a mortgage?

Of course, this question is very important for you because you would need to start making preparation for various charges and payments. You would need to know when to start with cost-cutting and be prepared for the further process. Your seller would also want to know the time frame of your payment.

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