What your mortgage provider won't tell you

Get an insider's perspective on the business of borrowing money. Your mortgage doesn't have to be a death pledge!

“Mortgage” means “death pledge”

But never fear—your life’s not at stake. If you can’t keep up repayments, I’ll settle for the house.

 

That 95% mortgage will cost

You might pay three times more interest than someone who borrows 40%. Interest rates jump at set points, such as 75%, 85%, 90% and 95%, so if you need 76%, see if you can increase your deposit instead.

 

I’ve launched a better deal since you applied

Keep an eye on my website because I change rates regularly to tempt new customers. If you find a bargain while the paperwork’s still going through, ask me if you can switch.

 

I need to know who’s living with you

Your grown-up children or elderly mum could claim an interest in the house and refuse to budge if it’s repossessed, so you’re unlikely to get a mortgage until they sign a waiver. You’ll also need my permission before taking in a lodger, and don’t even think of renting the house behind my back or you’ll be in breach of contract.

 

Shame about the fees

That low-interest deal could be pricey once you’ve paid an arrangement fee of almost £2,000. Search for mortgages charging slightly higher interest but lower fees and do the maths. With luck, you might even find one giving cashback.

 

Paying the mortgage may not pay for the house

If you’re one of the 30%–50% with an interest-only mortgage, you’re only servicing the loan. After 25 years, you still won’t own your home unless you’ve saved enough to pay back the amount you borrowed. If you’re worried, contact the government’s Money Advice Service (moneyadviceservice.org).

 

Sorry, you can’t take your mortgage with you

I know I said I’d switch it to your new home, but the Government now says it’s a separate transaction. I’ll have to assess you all over again and if you don’t fulfil my tight lending criteria, I’ll regretfully say no.

 

I like keen gardeners

Japanese knotweed can destroy walls and drains, and if it’s rampant you can forget about a mortgage.

 

Don’t wait until you’ve found your dream home

Agreeing a mortgage in principle before you start looking can give you the edge when you’re trying to buy.

 

Give brokers a grilling

Though mortgage brokers can often access special deals, some offers are only available to the public. To make sure you don’t miss out, ask them if they search the whole of the UK market. Then find out how much they charge and if they claim commission—some do both!

 

The Government may bail you out

It can top up a 5% deposit with a 20% loan for new homes and from January will guarantee repayments if you need a large mortgage for property of any age. And if repossession looms, the Mortgage Rescue Scheme can help you hang on to your house. Apply to your local council, but be quick because the scheme is set to end next spring.

 

Move to Wales to get on to the housing ladder

First-time buyers there borrow more but pay less of their income towards their mortgage than those in other parts of the UK.