Mortgage Advice

Questions to ask your mortgage lender

• What is the Annual Percentage Rate (APR)? Use this figure to compare each lender’s offerings.
  
  
• What mortgage terms are available? (expressed in years, i.e. 10, 15, 20, 30 year terms)
  
  
• What are the monthly payments for each of the terms you’re interested in? For example, get the lender to show you how much you’d pay for the loan over 15 years and 20 years so you can make a comparison and see how much the total cost will be.
  
  
• What impact would a percentage rate rise have on the monthly payments? Get your lender to show you how your monthly payments would rise for a 1%, 2% or even 5% rise in the interest rate.
  
  
• If there is an introductory interest rate, when is the end of that period, and what rate will be applied to the mortgage then? Get some examples from your lender of what the difference in the payments will be.
  
  
• How often is the interest rate calculated on the balance of the mortgage? Generally speaking, a daily calculated interest mortgage is better than a monthly calculated interest mortgage. Get your lender to explain the differences if you are unsure.
  
  
• What set up fees, administration charges and other incidental charges will be added to the mortgage? Get a clear breakdown of all of these charges, as this helps to compare mortgage lenders.
  
  
• Is there an early termination fee applicable? If you decide to pay off the mortgage early, will you be charged for doing so?
  
  
• Are the payment terms relatively flexible? Ask for things such as ‘payment holidays’ (where it is possible to take a small break from paying the monthly mortgage amount), ‘grace periods’ (where, in the event of late payments, there is a grace period after the due date where no penalty charges or other fees are charged), and the ability to pay fortnightly as opposed to monthly (if you divide the monthly mortgage payment by two, and pay it fortnightly you’ll actually end up paying 13 months worth of mortgage payments in a calendar year as opposed to 12. This means you can pay off your mortgage much faster, with very little impact on your wallet).