Buying our own home can be a complicated business; all the fees and confusing estate agents jargon. One of the biggest issues is getting a mortgage and all the questions that brings up. A mortgage is like a very large loan over a long period of time and is usually related to buying property. Your provider will be able to give you answers to many of the questions you may have about your mortgage.
The following are some of the more common examples:
• What is APR? – APR stands for the ‘Annual Percentage Rate’ this describes the interest rate for the whole year rather than just a monthly fee. The nominal APR is calculated as: the rate, for a payment period, multiplied by the number of payment periods in a year.
• What do I do if my personal details change? – You must let your mortgage provider know as soon as possible if your personal details change. Usually there will be contact details on your mortgage statement or any correspondence you have received. Alternatively you can look at their website.
• Can I change the due date for my mortgage repayments? – Most providers will allow you to change the due date of your mortgage repayments. However, be aware that you may be charged additional daily interest for the first month.
• I have a lifetime tracker or offset tracker, but my monthly payment hasn’t reduced in line with the Bank of England base rate. Why not? – The interest rates on tracker mortgages are usually linked to the Bank Base Rate of the provider. If the Bank Base Rate changes then the rate of interest on your mortgage will change. The Bank Base Rate does not always follow the Bank of England base rate.
• What happens if I miss a mortgage payment? – If you think you will not be able to make you monthly mortgage payment then it is advisable to contact your provider as soon as possible. They may be able to help you; most providers have schemes and procedures for when customers are in financial trouble. Please note that your home may be repossessed if you do not keep up repayments on your mortgage.
• Is there a fixed date for mortgage repayments? Most providers will have a fixed payment date when your mortgage is set up. This does vary from bank to bank and it is worth checking beforehand what the date and make sure you will have enough funds to pay the repayment. It is possible to ask to change the date but you may have to wait a few months before you are able to.
The Financial Services Authority (FSA) regulates the way most mortgages are sold, but not second-charge and most buy-to-let mortgages. This means firms must follow certain rules and standards when dealing with you. If you have any problems with your mortgage lender you can talk to the FSA.
If you would like to know more about mortgages why not ask AnswerBank Business and Finance.