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Buyers – here are five things you should check before signing a mortgage offer

News at Kings Group | 10/09/2019

While purchasing a property is an exciting prospect, the process is also full of potential pitfalls that could delay the ownership of your new home. Because of this, it’s absolutely crucial that you understand the ins and outs of the property buying journey – legal or otherwise.

Although your chosen estate agent will be on hand to assist you throughout, you’ll still need to be aware of the fundamentals of your mortgage to ensure you’re getting the best possible deal out of it, especially when you come to sign your mortgage offer.

In fact, two thirds (61%) of homeowners recently admitted that they didn’t read their mortgage agreement in full before signing it, according to research from online mortgage broker Trussle.

The study also revealed that a worrying 50% of homeowners did not understand all of the terminology used when buying a home, highlighting just how complicated the home buying process can be for some borrowers.

With this in mind, here at Kings Group we list five things homebuyers should always review and ensure they understand before signing a mortgage offer.

Check and double check

It’s crucial that you take extra care to analyse the details of your offer to ensure that it’s correct. This may seem obvious, but many people miss out on important information by not reading the mortgage agreement properly before signing.

The main things to look out for are the loan amount, monthly payments, the term, product and fees. Afterwards, read over it again to make sure you fully understand the details.

Overpayments allowance

Any overpayments made into your mortgage will shorten the term and allow you to pay the mortgage off sooner – reducing the overall amount of interest you’ll pay to a lender. Most fixed deals allow overpayments of up to 10% of the balance each year without you being charged early repayment fees.

Keep in mind, though, that getting this wrong can put you at risk of thousands of pounds in fees. So, while overpaying on your mortgage may sound worthwhile, try to avoid putting everything you have into overpayments and keep a buffer of savings for a rainy day.

Risk warnings and conditions of the mortgage

Risk warnings are included in some mortgages and may affect your mortgage repayments – for example, if there’s an interest rate rise. These warnings will be listed on your mortgage agreement, however, so make sure you are familiar with these in case you are exposed to these risks in the future.

Every lender has different conditions: some will require you to have buildings insurance, or they may ask that any credit commitments be paid on completion- so it’s worth reviewing these before agreeing to the offer.

‘Porting’ your mortgage

Porting a mortgage means taking your existing mortgage deal on your current property and transferring it to your new home (should you decide to move within your mortgage term).

This includes repaying your existing mortgage on the sale of your current property and resuming the mortgage on the same terms with your new property. Ensure you check the portability of your mortgage before agreeing to your offer.

The end date

Mortgage deals aren’t eternal, so check the end date of your mortgage to see when to start looking for another deal. The last thing you want is to fall onto the lender’s Standard Variable Rate, as this can be costly. Make sure you avoid this by switching to a better deal at the end of your fixed term.

Lastly, you need to take note of the expiry date of your mortgage offer. If you don’t complete before that date, you must apply for an extension.

Here at Kings Group, we can assist you with buying a home in Hertford, Walthamstow, Essex and the surrounding areas. For more information on our services, including our useful Mortgage Service, contact your local Kings Group branch today.

We also offer a free instant online valuation so you can see how much your home could be worth on the current market.