In addition to the interest rates, there are other regular fees and costs that accompany it. These regular fees and establishment costs will definitely determine the eventual amount you pay for your cheapest home loans. All these charges are accounted for by the annualized average percentage rate (AAPR), or the comparison rate to assist in comparing the different loans on offer. The first type of fee that you should be aware of is the application fee, which is asked by some lenders as upfront establishment fee. In some quarters this is called the commitment fees which eliminate jokers from wasting the lenders time. After the payment of the application fee the bank or the lender commences with the cheapest home loans processing.
The second type of fee is the valuation fee; this is charge for the cost of ascertaining the real value of the property that you are offering as collateral against the amount you request. If you have doubts whether the property will have the expected value, you should request a check before hand for you will have to foot the valuation fee even if the cheapest home loan is not approved.
In case you plan to clear or refinance the loan earlier than the fixed period, you should check on the exit penalties charged. Most of the cheapest home loans do not charge payout penalties but rather charge only the normal discharge expenses. The discharge costs or the deferred establishment fees or the early settlement fees are charged as a flat rate; either a few months’ interest or a percentage of the principle amount.
Another fee that comes with the cheapest home loans is the lender’s mortgage insurance. Fortunately, this does not affect all the cheapest home loans but only those that exceed eighty percent of the value of the house. Sadly, this insurance fee does not cover the home owner but rather the lender in case you default payment and your home is sold for a lesser amount than that you owe the lender or the balance.
Lastly there is the break cost; this is charged to recover all the interest that the lender could have received if you paid the cheapest home loan to the agreed period rather than early settlement. In this case the interest rate charge is very high compared to what you could have paid in the prescribed period. So before settling for any of the cheapest home loans do enlighten yourself with the fees that will apply to your borrowing
