Whether you are purchasing a family home or a holiday home, real estate investment is a huge undertaking – one that comes with a ton of financial implications. As such, it is not uncommon to approach a lender for home financing.
However, not all home mortgage plans are created equal. As with everything else in life, you want to shop around to avoid getting stuck with a not-so-great mortgage plan. But how exactly do you find the right lender for your home financing needs?
Here are three questions you need to ask before signing a mortgage contract:
Does the lender allow overpayments?
Any overpayments you make in your mortgage will certainly shorten your mortgage term and allow you to clear off your loan sooner. This also reduces the overall amount of interest payable on your loan. While overpaying your mortgage is a great idea, you want to be sure the lender you are about to get into business with is open to the idea.
Is the mortgage portable?
No one knows about tomorrow. Further down the road, your circumstances might change and you might want to refinance your home through a different lender. Find out about the portability of the mortgage and whether the lender will allow you to move your mortgage over to another lender before its term’s expiry.
What is the end date?
Mortgage plans do not last forever. Therefore, you ought to know when your mortgage plan will end so you can have adequate time to search for another deal. It is not uncommon for a lender to persuade you to sign up for a Standard Variable Rate. However, this can be a costly mistake. You are better off switching to a better deal to avoid this trap.
Protecting your interests
Home financing is one of the most important aspects of home ownership. Knowing what to look for in a mortgage contract can help you find a home financing deal that suits your interests.