Buying a house is one of the biggest financial decisions you?ll ever make. Perhaps you are looking to refinance and get a secured loan against your home for home improvements, debt consolidation or other expenses. We?re here to provide some tips on how you can save money on mortgages and homeowner loans.
If you?re purchasing a home, after you?ve narrowed down how much you afford, checked your credit and started looking around at properties, you?ll need to decide on a mortgage lender. One of the best ways to save money on your loan is to comparison shop lenders. Where should you shop around? Check with your bank, credit union or other direct lenders. The internet is a great place to comparison shop, as many of the lenders offer online-only incentives and discounts. If you are a first time buyer, there are many lenders that offer programs specifically to suit your needs. If you?re interested in a homeowner loan, check with your existing lender in addition to shopping around. Currently the UK has one of the most competitive markets for home loans. Several factors will help you get a better loan.
Whether you?re remortgaging or purchasing a new home, the better your financial health, the better chances you?ll have at getting a lower interest rate and better loan terms because lenders will be more apt to give you a better rate since you?re viewed as less of a credit risk than someone with poor credit. Make sure your credit report is accurate as this will affect your ability to negotiate with your lender. Even seemingly small errors, such as your address, can affect you.Even if you don?t have the best credit, there are lenders that will be willing to work with you. It?s still important that those with less than perfect credit shop around for the best rates and terms. Accepting the first offer you receive simply out of convenience or because you don?t think another lender will offer you a better rate due to your credit score is doing a disservice to yourself.
Beware of lenders that don?t offer you their rates and terms up front. If they are not willing to tell you what your payments will be, it's wise for you to move on to another lender. Many banks and lenders will require you to go through the application process first. Although it?s critical to shop around in order to get the best loan, you also don?t want too many loan enquiries against your credit, as this can damage your credit rating. Do research on the lender prior to moving forward with the application process.Make sure that the loan terms are something you can realistically live with. It might make the most sense for you to go with an interest-only loan, or a repayment loan, depending on your long term goals. Ask yourself if you can afford the monthly payments. If you?re unable to repay the loan within the terms, it doesn?t matter what the interest rate is or the size of the deposit, you?ll be facing additional fees for defaulting on the loan.
Another area that will save you money is checking what the lender charges for an application fee (many are non refundable should the loan not work out) and a closing fee. Often there are hidden fees, such as insurance tie-ins, payment protection, exit fees (should you decide to pay the loan off early if you find a better rate later on), or late repayment fees. Before you sign the loan, read the small print on the fees.