The simple answer is – pretty much everything. Taking on a mortgage is a big decision with impactful consequences and you need to be as rational and cold-blooded about it as possible. There are many seemingly attractive offers on the market and in most cases it is very hard to know where the pitfalls lie before it is too late – therefore, asking for professional advice before signing on the dotted line will not only make the paperwork much less burdensome, but also save you from potential calamity.
Never rush for a “quick deal”
One of the most common trade practices is to tell the customer that the price might increase tomorrow and hence you have to sign the contract today. This puts a lot of pressure on you, the client – and it can be very hard to resist. However, you need to remember that you are buying a new home and not speculatively spot trading on the Wall Street stock exchange. The best way to reply to the sales manager who tries to put pressure on you would be to tell them that you need to think about the deal, carefully consider it, and if the price does rise, you will not buy it – because it would no longer be the best deal. That way you put the pressure back on a broker who will not want to lose a potential client.
Mortgage is not just about the loan
The owner of the house might already have a special offer for a mortgage in a bank of their choice, but again, you need to stay calm and check if it really is the best option. Many people only compare factors like the interest rate, duration (length), and the upfront payment, forgetting that a mortgage agreement includes a lot more than that.
One big factor is insurance – some banks only want you to insure your new home, but others might want you to have life and health insurance as well – and this could be a considerable expense and not within your immediately-achievable budget.
Moreover, whilst you’ll most likely never forget to pay your monthly instalment on time, it might not be so straightforward when it comes to insurance payments – especially if you are not used to them. The banks know this and many mortgage agreements include a policy on what happens should you miss a monthly insurance payment. They might increase the interest rate or even call in a loan early.
In order to avoid this, you need to read your mortgage agreement very carefully and not be afraid to negotiate any parts of it that you are uncomfortable with. Remember, it is better to seem stubborn and boring than to take out a £200k loan that you don’t thoroughly understand!
Better safe than sorry
The sage advice would be to consult a professional before signing any agreements. It is vital to understand the current conditions in the market, check if there are or recently were any significant changes in legislation that could affect mortgages and have a qualified expert rubber stamp your mortgage calculations.
Remember – cheapest doesn’t always mean best. This is your new home, the roof over your heads, a seat of great memories that you are buying, and it is worth spending time on it! If, however, time is not a resource you can easily spare, getting professional financial advice would save you from many potential pitfalls – as well as give you the confidence in your choice.