Longterm Offset Mortgages
Extra Mortgage Costs - part 2
5. Exit fees
Because the mortgage marketplace is so competitive now and there are always better deals than your existing one available, most lenders will charge you an exit fee of a couple of hundred pounds. This is to try and stop you switching to another lender.
6. Redemption penalties
For the same reason as above, many lenders will offer you a great deal – say a cashback or discounted rate for two years. However, part of your contract with them is the length of time you are tied in to them. This, for example, could be for another year after your discounted rate ends.
You will then have to pay a redemption penalty to get out of the contract. This could be anything from paying a percentage back of your cashback or even paying thousands of pounds.
Check the terms and conditions very carefully to see what your chosen lender’s redemption penalties are like.
7. Home and contents insurance
You need to protect your home and contents! Don’t buy insurance from your mortgage lender (who will undoubtedly charge you more than they need to). Shop around online for a better deal.
8. Life assurance
Life assurance ensures that should you die during the term of your mortgage, your outstanding mortgage amount will be paid off. This means that your partner and dependants will not have the financial worry about paying the mortgage.
9. Mortgage payment protection insurance (MPPI)
MPPI policies will help pay your mortgage should be unable to work due to accident, sickness or involuntary redundancy. As with all mortgage related insurance, lenders’ policies are more expensive than those from specialist providers.
10. Stamp duty
Stamp duty is a tax that you have to pay when you buy a property. The charging structure goes in bands, with 1% charged for properties valued at £125,001 to £250,000.
For properties valued from £250,001 to £500,000 it is 3%. And it is 4% for £500,001 and above.
It is expensive and unavoidable sadly!
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