When
working out the true cost of your mortgage these hidden charges
are less obvious. They may apply when you choose to take your
buildings insurance with a company other than your mortgage
provider, or when you change your mortgage whilst remaining
with the same provider. These are things you really might
not expect to have to pay for, but some lenders charge all
of these.
These
are another way of getting even more money from mortgage borrowers
and home buyers. They are of no benefit to you but are solely
to cover the lender in case you have problems repaying the
mortgage.
Costs vary dramatically, but you can expect to pay roughly
£1,500 per £100,000 of purchase price.
So the MIG for a £150,000 property might be £2,250.
All
mortgage lenders will insist on your having buildings
insurance in case there's a fire etc, to protect their
interest - don't forget they in effect own "your"
home until you have paid off the mortgage.
As
part of your mortgage deal they will offer you a ready made
insurance policy they have, which is usually includes contents
insurance - ie for your posessions, which is always a good
idea to have.
You
will also need mortgage
payment protection insurance ie in case of illness etc
to insure your regular mortgage payments are paid.
The golden rule is never automatically get your home
and mortgage insurance from your mortgage lender. They make
big money on overcharging for buildings and
contents cover.You can very likely get the same insurance
for less elsewhere.
It
is not actually illegal for your lender to insist that you
take out their insurance policy as part of your mortgage.
This is called insurance
tying in. Thankfully it is becoming less common mainly
owing to greater consumer awareness of good insurance deals
available online.
If you get your insurance from another, cheaper provider,
don’t be surprised if your lender adds a little ‘admin
fee’ by way of punishment. This can be around £35
but will depend on the lender.
Other
Real Costs to Bear in mind
Unfortunately,
even after everything has been signed and sealed there are still
costs to consider, mainly concerning your move and new property...
Renovations, repairs, decorating, carpets, furniture, appliances
etc.
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