Even if you’re not struggling to pay your mortgage, you’ll want to make sure you stay in control of your payments and not run into trouble. Your mortgage repayments are not an automatic way of making the finance you owe. 

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Excluded interest

You can sometimes lower the interest you pay on your loan. If your bank tells you it wont charge you any interest on your mortgage and you’re not in arrears with your mortgage, then that statement should be treated as a statement of your current interest rates.

You may not get a mortgage if your income, expenditure or debts are more than your mortgage payment. Your lender must give you a financial assessment showing that you have the income, expenditure and debts you need to qualify for a mortgage. If you are thinking of obtaining a mortgage, we highly suggest visiting this website at https://www.sofi.com/home-loans/mortgage/ to get all the details about the process. 

The interest rate you have to pay is called the standard variable rate (SVR) and varies according to your payment and the maturity of your mortgage. For example, if your standard variable rate is 4.25%, you wont be charged interest on this payment for 30 years.

Prepayment penalty

A penalty applies if you go into default on your mortgage before your minimum monthly payment. This includes any late payment fees.

The penalty will be deducted from your balance if you cant make the payment. The penalty is higher if you’re on a variable rate. A balance of 12,000 plus the penalty will be 120. If your interest rate is 10% and your monthly repayment is 200, you’ll need to pay 80 to pay your mortgage and your penalty will be 80.

If you’re paying 150 a month for a mortgage of 400, the penalty would be 90. If you’re paying 100 a month, 10 of your interest payment will be deducted from your account as a penalty.

You’ll have an unlimited penalty for late payments if you are on a variable rate.

Surcharge

Most mortgages have a surcharge on certain borrowers to cover the costs of tax, social security, the cost of you making the mortgage loan and any interest that may be charged on a loan to you. This surcharge is called the hazard premium and it can vary with your payment and the length of your mortgage. It is different for each lender.

The surcharge is not a fixed rate that you must pay. Rather, it is the amount you’ll have to pay for the amount of interest you’ve paid on the mortgage over the term of your mortgage. For example, if you’re paying a 200 payment and pay 10 a month for a mortgage of 400, your surcharge will be 30 for the 30 years. If you don’t pay your mortgage for 30 years you don’t pay the surcharge.

Overpayments

The government is keen to encourage borrowers to make a healthy return on their mortgage payments by backing up the terms of your loan when you overpay for your mortgage. It is called penalty advance.

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