All fine print · Money
The important part of a mortgage agreement
The interest rate gets all the attention and is rarely where the money goes. Look at how the rate can move, what leaving costs, what is bundled in, and what counts as default.
The four parts that decide it
How the rate can move
Fixed, variable or mixed; the reference index; the margin over it; how often it resets; and whether there is a floor or a cap. A margin is forever, an introductory rate is not.
The cost of leaving
Early repayment charges, whether they taper over time, and whether they apply to overpayments as well as to full redemption. This decides whether you can ever refinance.
What is bundled in
Rate discounts tied to buying insurance, a pension, a card or a salary account. Price the bundle over the full term, because a small discount can cost more than it saves.
What counts as default
How many missed payments trigger acceleration, what happens then, and whether the lender can demand the whole balance. It is the least likely clause to apply and the most serious.
The traps
- A total cost figure that excludes the bundled products required to get the advertised rate.
- Fees rolled into the loan, so you pay interest on the arrangement fee for thirty years.
- A rate floor that means the variable rate can rise but not fall below a set level.
Red flags
- Early repayment charges that do not reduce over the term.
- A discount that disappears if you cancel a bundled product, with no way to price that risk.
- Pressure to sign at the notary or closing before you have read the final figures.
Three easy wins
- Ask for the total cost over the full term with and without every bundled product. The number usually surprises the salesperson too.
- Negotiate the margin, not the introductory rate. The margin is the part that lasts.
- Get the final binding offer at least a few days before signing, and read it somewhere quiet.
Questions
Fixed or variable?
Fixed buys certainty and usually costs more; variable bets on rates falling and exposes you if they do not. The right answer depends on how much of a rise your household could absorb, not on a forecast.
Are bundled products ever worth it?
Sometimes, when you would have bought the product anyway at a similar price. The test is whether you would choose it on its own merits with no discount attached.
Now do it to the actual document
Paste the contract into the tool and see which sentences it thinks matter. Then check them against the four parts above.
Open the toolNot legal advice. This is a checklist of what to look for, written to be useful in any country. It is not advice on your document, your situation or your jurisdiction, and the law where you live may say something different. For anything that matters, pay a professional for an hour of their time.