Mortgage basics for the UK
With an endless amount of mortgages to choose from, it’s important to know what to look out for – and what to avoid. There are two main factors to consider when choosing a mortgage;
1. What is the interest rate?
This is one of the most important features of a mortgage; lenders offer vastly different interest rates so it’s important to shop around. The lower the interest rate, the less money you’ll need to pay back over the mortgage term.
2. What are the exit penalties?
When you sign up for a mortgage, you agree to pay back the loan over a fixed period of time – the mortgage term. If you decide to terminate your contract before the mortgage term is complete, the lender could charge you a penalty fee of as much as 5% of the remaining mortgage.
It’s essential to find a mortgage that allows you to be flexible, so find out about the exit penalties before you sign up. The lower the interest rate, the higher the exit penalties are likely to be.
