Items Tagged With mortgage

We can add the following to the basic 15 Steps To Reducing Your Mortgage:

1. Buy a house rather than a flat
   
   
2. Always keep your monthly payments WITHIN THE MONTH CONCERNED - even a few days out can cost you dear for the rest of the year, or when taking out another loan
   
   
3. Go direct to the lender
   
   
4. Try NOT to take out a mortgage with the same bank that holds your current account - they say that power corrupts and absolute power...
   
   
5. DON'T take out a foreign currency mortgage
   
   
6. Unless you really need to, avoid taking out a long term fixed rate mortgage - rates tend to be high and you almost always never do it at the right time
   
   
7. Don't over-capitalise the property with "improvements" - buy as large a house as you can, rather than one you have to keep adding to
   
   
8. If your eyes really are bigger than your pocket, consider a "split equity" type of deal (more of these later)
   
   
9. Choose well and stick with your decision - like good investments a good mortgage is worth sticking with rather than switching from one fad to another, particularly when you consider the charges involved in remortgaging

To make a success of obtaining, or changing, a mortgage it's important to develop the same attitude as the lenders and brokers themselves. In particular, it's vital that you think of mortgages as 'products' - items that are bought and sold.

Seems odd, I know, but that's exactly how banks, lending houses and, increasingly, building societies think of mortgages - packages of money that are bought and sold.

Today, a lender 'buys' blocks of money in the market at the best price that it can (i.e. borrows at the lowest possible rate over base). It then 'sells' that money to customers (i.e. lends it out) at the highest possible rate that it can get. The difference is the profit that the lender makes.

As a happy shopper hardened in the white heat of the consumerist 21st century, your job is to buy at the best price you can. That means finding out who's offering what and when.

If you're looking for the best possible deal, go to an auction of repossessed properties. You may well end up paying 50% or less of the open 'market' value.

The problem is that you'll almost certainly be buying a property that has been extensively "gutted" by the previous owners, or other unsavoury occupants, since the repossession, and you may not even be able to get a mortgage to buy the place!

Sounds daft I know, but a recent mortgage case of my own experience brings home the point. The applicant was recently divorced and wanted to buy a home of his own. His previous wife had possession of their old home under a "clean break" settlement and no children were involved. He had been with the same employer for most of his working life and was in a very stable job.

And finally:

• NEVER make your final offer your first one

If you can afford to go higher, don't give the vendor that knowledge. Go LOW to start off with and then see what the counter position is. However, don't be silly with that first offer. The vendors may consider you a time-waster and simply dismiss you out-of-hand. Ask the estate agent what THEY consider a fair valuation and then go below that. You'll all probably end up at their figure anyway, provided there aren't large amounts of extra work that need doing on the building.

Getting the property at the right price is not only important from the point of view of how much you'll pay, it is also vital to whether you'll get a mortgage or not.

As someone just about to take on the biggest debt of your life you need to know EXACTLY how to find the best product AND how to apply it to your best advantage. Structuring your mortgage to its optimum cost-effectiveness is ESSENTIAL, IRRESPECTIVE OF HOW GOOD A PRODUCT YOU TAKE ON. The best interest rate applied carelessly will still end up costing you more per month than is absolutely necessary.

There are many ways you can buy potatoes. At the local corner shop or in the out-of-town supermarket. Ready washed in small bags or unwashed by the half-hundredweight. Bakers or roasters. Named or unnamed.

A lot of potential decisions, but often people just "buy a bag of tates whilst they're out shopping". Those in-the-know will buy very specifically because they understand the taste and texture benefits they'll get from a clever purchase. Those who haven't a clue will take what's on the shelf.