Banks and brokers don’t want you to know many things.
So what is it exactly that they do not want you to know? The short answer often feels like ‘everything’, possibly along with feeling like you want to tear your hair out in frustration. Unfortunately, that doesn’t help remedy the problem. What does help is doing your research to make sure you’re wise to the common things they try to keep you in the dark about.
And one of the areas where being kept in the dark can lead to you ending up with the sub-optimal set up is when sorting out a mortgage. So here is a quick round up of five key things banks and mortgage brokers don’t want you to know:
You can DIY mortgages
Particularly with the amount of info online! It’s pretty easy to find and compare mortgage rates in your local area, then call a bank yourself rather than paying someone else to do it. Even if you use a mortgage broker, doing your own research as well can help prevent the wool being pulled over your eyes if it turns out they aren’t as scrupulous as you’d hope.
A 5-year fixed rate isn’t one size fits all
Even if you get the lowest fixed rate on the market, you might have been better with the variable rate instead. On a fixed rate, there’s usually a hefty start up fee. Sure, it’s a one-off – but particularly if it’s a smaller mortgage, it might be more cost effective to have a lower fee and higher rate.
You’re also pretty much tied in to staying at that property for the full duration. That might be the plan, but the lack of flexibility could be a problem if unforeseen circumstances come up. Even when you can in theory transfer the mortgage to a new property, you have to re-apply and may not get the same deal, or not qualify under changed criteria.
Close at the end of the month
Interest starts to accrue from the day your transaction closes – so close on your home loan at the end of the month not the start. You’ll have a greater closing cost, but less prepaid interest. If you close at the start of the month, you have to pay that month’s interest as well at that between closing and your first payment.
No-one has no closing costs in reality
If you aren’t charged an official ‘closing cost’, you’re paying for it somehow else. Higher interest rates or other fees compensate for the lack of direct cost of closing, so overall you might not be any better off on this kind of deal.
Tip of the iceberg
This isn’t the only area where your bank and related brokers aren’t keen for you to know everything. Even at the level of being aware in advance of what fees you’re likely to get, banks don’t really want you to know. After all – those hidden overdraft and access fees are one of the ways they make their money!
It’s not even everything about a mortgage that you should probably know but likely won’t be told. But it’s a starting point of things to look out for and think about. In the end, the key thing is to not take things at face value and independently fact check whatever you’re told rather than relying on the sales spiel.