Consider the following advice from the U.S. Department of Housing and Urban Development when applying for a loan:

Be sure to read and understand everything before you sign;

Refuse to sign any blank documents;

Do not buy property for someone else;

Do not overstate your income;

Do not overstate how long you have been employed;

Do not overstate your assets;

Accurately report your debts;

Do not change your income tax returns for any reason;

Tell the whole truth about gifts;

Do not list fake co-borrowers on your loan application;

Be truthful about your credit problems, past and present;

Be honest about your intention to occupy the house;

Do not provide false supporting documents.

Watch out for the 'Deal Of A Lifetime', the deal that seems too good to be true. If you see that a few companies are quoting much lower than average, ask: Why? If you you can never speak to an individual, or you have to wait 'on hold' for a long time, this speaks badly for the level of service you are likely to get.

Get cheaper household insurance - Reduce your household expenses by shopping around for your buildings and contents insurance. It's convenient to buy from your lender, but search the market and you could save a packet.

Don't take out a Mortgage Indemnity Guarantee (MIG) - MIGs are now usually only charged on loans of 90% to value. A MIG is a one-off payment made to the lender that protects them if you fail to keep up your repayments and your home is repossessed. If you can avoid paying for one, do, it will save you money.

Getting a fixed rate: get a written statement which details the interest rate, how long the rate is fixed for, and details about the program.

When interest rates fall: try and leave your repayments as they are. You will therefore be paying more than the minimum each month. You'll repay your loan much earlier. If you continue paying at the higher rate, when rates rise again you might not have to change your repayment.

Don't churn your mortgage loan. Each time you refinance you'll likely incur completion costs and non-refundable fees. Don't let a lender talk you into rewriting your mortgage just to get a little cash back.

Many people find that they have added £6,500 or more to their debt in order to obtain £3,500 in cash. An example of this is second mortgage loans.

Beware of prepayment penalties. Many 'no fee' credit lines have a pre-payment penalty. This can be very expensive if you are planning to refinance or sell your house in a few years time.

There is no need to sign a loan which contains any significant prepayment penalty, if you have good credit. One of the smartest things someone can do with a mortgage is to prepay on the loan.

All you need to do is contact your lender and ask for its prepayment procedure. Then, once a year, check the loan balance the lender sends you, to make sure the additional payments have been accounted properly.

Don't look for a home without being pre-approved. You will have much more negotiating power with the vendor, and may be able to save thousands of pounds.

Verbal (oral) agreements are worthless. When buying or selling property, always get it in writing.

Don't buy a home without full, professional survey(s). Human beings can be perverse; happy to spend £150,000 on a house after a half-hour viewing, but be-grudge spending £500 finding out whether it's worth buying in the first place!

Don't take the vendors' word that repairs have been made. If the vendor agrees to make repairs, have your inspector verify the work's been done before completion.

Shop for home insurance well before you are ready to complete. If you wait until the last minute to get insurance, you may have no time left to shop around for the best policy. A paid homeowner's insurance policy (or a paid receipt for one) is required at completion.

Do a break-even analysis before refinancing. To determine the number of months you'll have to stay in the property to recoup your costs, divide the total refinancing costs by the monthly savings,

Find out the true value of your home. Get more than one independent appraisal. Compare it with the prices of similar-sized houses for sale in the same area. Be like mortgage companies and estate agents, and use the sales (or market data) comparison approach.

Keep your mortgage as small as possible. Aim for *comfortable* affordability.

You will find mortgage lenders who will stretch your qualification ratios. They aren't doing you a favour. The qualification ratio is the ratio of your total mortgage payment to your total income.

The traditional ratios are: The mortgage payment as 28% of your income; The total of your mortgage payment plus your monthly debt payments as 36% of your income.

Start gathering documents. Provide your mortgage company with documents in a timely manner. If you let your rate lock expire, you could end up paying higher rates.

There are a number of documents you will need, and the approval process will go much smoother if you begin to gather them now. Examples: Tax returns from the last few years (especially if you are self-employed), copies of pay slips, and bank statements for all accounts (current and saving) for the past three to six months.

Remember completion costs. In addition to your deposit/downpayment, you will need to reserve funds for completion costs. Depending on the type of loan and your location, these costs can range from 2-5% of the mortgage amount, which will be paid in cash at completion, *and cannot be borrowed funds*.

Consider a fifteen or twenty year term. Many purchasers assume that a shorter term will make their payments impossible. Unless you make the comparison, 'though, you may never know if a 15 or 20 year term could have been affordable. Try to pay off your mortgage as quickly as possible. *Use a mortgage calculator with an amortization function*.

Choose a lender with a clean record with the industry watchdogs in your country. The mortgage industry receives a great number of complaints against it. In the UK, credit brokers of any kind must have a licence from the OFT, and if they lose it, the OFT publishes this on their website.

Check your mortgage payments are correct - do the mathematics. There's a one in ten chance you could be paying more than you should.

Ensure you review your mortgage regularly - regular reviews, and possibly remortgaging, will ensure you pay as little as possible in interest.

Copyright © 2005 T. O'Donnell

About T. O'Donnell: T. O' Donnell (http://www.tigertom.com/mortgages-uk.shtml) offers mortgage quotes, advice, an ebook and a mortgage calculator, in London, UK.