If you are going to take out a mortgage, what should you pay attention to? It's just not something most of us do on a daily basis (thankfully!). And there is also a lot to consider. Therefore, make sure that you have done your homework beforehand and have already thought about several things. In this blog you can read tips and advice if you are going to take out a mortgage. From my own experience (I have now bought a house 5 times) and supplemented with information from our advisor.
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As soon as you buy a house, you have to believe in it. Whether it is your first home, or if you are moving to another home, for example. At the moment, due to the low interest rates, it is interesting to buy a house and to take out a (new) mortgage for it.
However, make sure that it is all right with that mortgage, because you are not done with it for the time being! I can hear you thinking:'My adviser will arrange that mortgage'. But to be honest, I don't think that's a good approach. If you are going to take out a mortgage, you also need to know what you are talking about. Because even if the interest rate is low now, if you take out a mortgage with a fixed interest period of 10 years, you have to realize that a lot can change in 10 years! Do you not understand some things? Then ask your adviser or find out for yourself. But make sure you are aware.
It involves huge amounts of money, and often the next 10, 20 or 30 years of your life. Then you want to know what is involved when you take out that mortgage? Hence our tips:you should pay attention to this when taking out a mortgage:
Decorating your new home could just be a hobby for you! Unfortunately, this probably does not apply to taking out your (new) mortgage. You may be tempted to blame it all on your partner (or that advisor), but it's still smart to really think through decisions together. And we have listed even more tips for you.
It is very important if you are not a mortgage expert yourself:get good advice. And by an independent consultant. That costs money, but you can count on the fact that the right help and advice can actually earn you money in the future.
A mortgage advisor can look at your personal situation and give you appropriate advice based on that. Did you know, for example, that it is a lot more difficult for self-employed people to get a mortgage?
When looking for a suitable mortgage advisor, it is important that you click, that there is trust and that you know that your advisor can in principle take out a mortgage for you with any lender. There are also advisors who only work for a limited number of providers. You will then always be tied to one of those specific mortgage providers if you are going to take out something and that is not always beneficial for your interest.
There are a lot of comparison sites when it comes to mortgages. But beware:these are not all equally neutral. Go for a reliable mortgage comparator, and ultimately for a mortgage lender that you know is reliable. But then you are not there yet:also make sure that you know what to look out for if you are really going to take out a mortgage.
If you have taken advice from an independent expert, they will also have pointed you to reliable mortgage lenders. Are you going to compare yourself? Make sure that you always compare mortgages with the same term. Otherwise, the monthly payments differ so much that you get a very skewed comparison. And there are more things to keep in mind!
As soon as you start snooping around on comparison sites, the term 'lowest mortgage interest' is thrown around you. And the low interest rate is also an important aspect that you should pay attention to when taking out a mortgage, but not the only one! Your mortgage consists of an interest component and a repayment component. That is why the lowest mortgage interest rate does not always result in the lowest net monthly costs. Make sure you include both components when taking out and comparing mortgages.
Also be careful not to be tempted by 'interest discount':often temporary lures that may make a mortgage seem cheap. It can be beneficial (especially in the beginning), but always calculate what the mortgage interest is over the entire term of your mortgage.
Sometimes mortgage lenders also offer interest discounts by offering a life insurance policy. You will then save on your mortgage interest. This can be beneficial, but again it may not be the best option for you personally. Be well informed about this so as not to run any risks.
The equity of your home also applies. The more equity, the lower the risk for the bank and the better for your mortgage interest. It can also be interesting, if you have the opportunity, to use your own funds to reduce your mortgage. Ask yourself the maximum amount you can borrow, but also whether you want it. It can be wise to bring in your own money, but of course you have to be able to handle that financially.
For example, we used (and needed) the equity from our previous house to be able to buy our current house, but we also kept the necessary aside to be able to renovate and do odd jobs.
Now that the mortgage interest rate is historically low, it is even more interesting to fix the mortgage for a longer period. But do take a look at your personal situation. If, for example, there are already future relocation plans, it is smarter to go for a short fixed-interest period. This also applies if you are a bit older and expect that an inheritance will be released within a certain period.
You should also make a conscious choice when the mortgage interest rate is high. Please note:it is then always a matter of waiting to see which interest rate you will be offered next.
Are you considering taking out an interest-only mortgage? This means that you only pay interest per month, and no repayment. You repay the debt of the repayment when you sell your house, for example with savings or with the proceeds of the sale of your house. That is of course possible, but don't be tempted to get too large an interest-only part because it also entails risks.
Please note:here there is a risk that the sale of your house will not yield enough to pay off your mortgage, then you will have a problem. You can make interim repayments if you wish, you can read more about this in my blog about paying off interest-only mortgage.
What you should also pay attention to when taking out a mortgage is that you are protected yourself. For example, do you insure yourself against incapacity for work, or take out unemployment insurance. And also think in advance about how you will arrange things if things go wrong in your relationship and a divorce is imminent.
Difficult questions, therefore, where good advice is probably not a luxury. Ultimately, our advice is that it is best to get advice from someone who understands it!
