When you are looking to buy a property, applying for a mortgage is a very important step. Indeed, the terms you secure from your bank will determine what you repay over several years. Do not overlook this step, as the differences can be considerable!
What basis should be used to compare the different mortgages?
The best way to compare offers is to use a common indicator that allows for an objective comparison. Looking only at the borrowing rate offered is not enough!
Indeed, there are other ancillary costs associated with the mortgage itself, so these must also be taken into account.
The tool provided by banks for comparing mortgages is the APR, or annual percentage rate. The advantage of this indicator is that it takes into account all costs associated with the purchase, rather than just the borrowing interest rate.
These costs therefore include one-off costs: bank application fees and any valuation fees;
as well as recurring costs: fire insurance, outstanding balance insurance and having your current account paid into the bank. Please note that you are under no obligation to take out these services with the bank granting your mortgage, but doing so will entitle you to a preferential rate.
Although the interest rate is important because it accounts for the largest part of the repayment, the other costs should not be overlooked!
GOOD TO KNOW: This indicator must now be provided when you apply for a mortgage. This requirement also stems from a European directive aimed at protecting consumers.
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