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There are a few costs involved in getting a
mortgage. Obviously the main one is the interest you pay. There are
others such as the initial set up cost for the mortgage, known as
the application fee.
Interest Rates - Over the period you pay
your mortgage, which in most cases is 15-30 years, it is likely that
you have paid more in interest than the actual loan itself. That is
motivation to pay your mortgage off as soon as you can.
Application Fee - this can sometimes be as
percentage of the mortgage, perhaps some where in the region of 1%,
or just a flat fee. It is often negotiable, and if you are a good
enough customer of the bank you might be able to get them to wave
the fee entirely.
Valuation - a valuation might also be
requested from the bank, this is more common if you are borrowing a
percentage of the property's value.
Low Equity Premium - the banks find
mortgages with little equity a bit more risky. So the banks could
charge you a little more, sort of like an insurance.
Switching Fees - if you wanted to change
some aspect of your mortgage, for example going from a fixed to a
floating rate, then the bank will charge you a fee. In some cases
they can be quite significant depending on your terms and if the
interest rates have changed dramatically.
Fixed Mortgage Repayment Fees - if you have
a fixed mortgage and wish to make a lump sum payment then it is
quite possible that you will be charged some sort of penalty.
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