THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Finding the best deal for your mortgage
You need to first find the deal that you want to go for. To do this effectively, you should search all of the deals on the market. You can do this by visiting our whole-of-market based mortgage comparison table.
Remember to check the overall cost of borrowing, do not just be led by the cheapest rate, as there are additional charges to consider, including set up costs and exit fees.
You should take into account:
The interest rate and how long it applies
The type of rate: fixed rate, discounted, or variable rate
What the rate reverts to at the end of the 'deal' term
Any overhanging penalties from extended tie-in terms
Arrangement fees
Redemption fees
Whether fees will be added to your mortgage - you will pay interest on them if so
Eligibility criteria
While this list may not be exhaustive, it gives a good idea of the kind of areas you need to consider.
Applying for your agreement in principle
Once you have decided on the deal you want, you need to apply for it. You can sometimes do some of the paperwork online, but you will usually need to send proof of your income. This will come from:
Payslips
Three years of accounts if you are self-employed
Three months' worth of utility bills as proof of your current address
A form of photo ID, such as a passport or driving licence
The lender may stipulate certain conditions about the mortgage in principle, such as specifying what type of property it can and can't lend against.
How long is your agreement in principle valid for?
Once you have the agreement, you usually have six months make up your mind. This can give you flexibility, as you can decide to accept the mortgage deal or not within this time frame.
If it takes you a while to find a property you want to buy, then you may find that the interest rates have gone down from when the mortgage in principle was arranged.
If this is the case, you may want to speak to another lender to get a better deal and let the pre-arranged mortgage lapse.
Another credit check will be needed and may lose money by leaving your previous deal, so get advice if you are unsure of the best course of action.
