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How to find the right mortgage
The following five rules will help you find an affordable mortgage that is right for you and your personal situation:
1. Do your homeworkEnquire about the terms and conditions applying to your existing mortgage well in advance. Negotiating a successful mortgage agreement takes time. Get an idea of typical mortgage rates early on and consider the types of mortgages that might work for you.
2. CompareRequest quotes from different lenders. Compare the quotes and decide from the best deals which lender you would like to contact to arrange an appointment. As well as comparing interest rates, bear in mind that the applicable charges may also vary significantly.
3. Sell yourselfHow the lender assesses the property and your personal financial situation will directly affect what mortgage rate you will be offered. Relevant factors include an increase in salary, an increase in the value of any owned property or property investments, an increase in assets (e.g. inheritance), reduced financial obligations, or changes to your family circumstances. If there have been positive changes, notify your current lender and ask for better interest terms.
4. NegotiateA mortgage is a matter for negotiation. Both the mortgage rate and any charges applied by the lenders as part of the mortgage offer are up for negotiation. Discuss these charges with your lender. Could you imagine switching from your main bank? If so, banks are often willing to agree to discounted interest rates in such cases.
5. Stay flexibleBear in mind that the mortgage you have just taken out will end at some point and you will need to switch to a new deal. When interest rates are low, many lenders advise you to stagger the mortgage terms. Try to avoid this. Usually, you will need to remortgage the sub-account that matures first with the same bank. This reduces your flexibility considerably. When interest rates are low, it generally pays to lock into these favourable market conditions for as long as possible, i.e. by taking out a long-term fixed-rate mortgage. It is possible to benefit from staggered mortgage terms (with interest payments more evenly distributed over the long term) while also retaining your flexibility. To do this, you build up reserves when the rates are low by investing the difference between the long-term average of 5% (variable-rate mortgages) and the rate you are actually paying. You can then use these reserves to help finance your above-average interest payments during periods when interest rates are high.
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