Home Buyers Guide

Chapter 5: Mortgage Basics

10 Top Tips on Mortgages

1. Each Bank and Building Society has different criteria, or rules, to calculate how much you can borrow. So if one bank doesn't offer you a big enough mortgage, don't panic. Another lender could come up trumps.

2. Using a mortgage broker makes more sense than ever during the credit crunch. Brokers deal with the lenders on a daily basis, so they know who’s offering the best deals and which lenders are likely to approve your mortgage.

3. It is really important to get approval in principle before you do anything else. Not only does it remove the guess work and establish a price range for you, it also effectively makes you a 'cash buyer' which could be the difference between having your offer on a property accepted or rejected.

4. Does your broker charge a broker fee?

5. Will you be charged an indemnity bond fee and if so, how much will it cost?

6. Find out what flexible options, such as payment holidays, are on offer.

7. If you are considering a fixed rate, remember that you will be charged a penalty if you pay off the mortgage during the fixed rate period.

8. If you are on a tight budget you could consider an interest only mortgage to keep your payments low at the start of the mortgage (when you have to pay for new furniture, legal fees etc)

9. If you don’t qualify for a mortgage, consider the alternatives, such as buying with a friend. (for 7 other suggestions, read the chapter entitled ‘Help, I can’t afford to buy a home’.

10. If you are offered a discounted rate, find out what rate you’ll get when the discounted rate is over.

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