Everybody will tell you how critical it is to compare between different loan offers before getting yourself and your family in a mortgage contract. If you want to get the best interest rates or terms on the markets you will have to take some time to shop around. You want the best but you may think it is too complicated for you. But don’t worry you don’t need to a financial expert. You can use three easy tools in your comparison of mortgage contract.

          First when you approach a mortgage broker or lender, you have to ask for a document called “Key facts” (or KFI). Whenever a firm makes a mortgage recommendation to you it must give you a key facts illustration on that basis. This document will list the most important features of the mortgage in a standard way so you can compare it with other similar mortgages. It is highly recommended to use this document to shop around and get the service you want. By comparing key facts illustrations for different mortgages you will be able to work out which one is best for you.

          Second: use the APR (Annual Percentage Rate of charge). The APR takes into account not only the interest rate on the loan but also other charges you have to pay. It is a figure representing the total charge payable each year for a loan. All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR is, the better the deal for you. So the important thing is to use the APR to compare costs when you are shopping around for a loan.

          Third: accept “approval in principle” (AIP) only in the final steps of your search and ready to make an offer to buy a property. Lenders or mortgage broker may offer to give you an AIP or a ‘mortgage promise’. This is a promise to lend you a given amount on certain terms and conditions. But the firm will have to do a credit search to provide an AIP and this will appear on your credit file. When you eventually may apply for a mortgage you may be in trouble if too many credit checks over a short period of time appear on your credit report.

          At last deal only with authorized firms. Mortgage brokers will either be authorized by the FSA or be agents for other authorized firms. You will be ensured that they will follow FSA rules when dealing with you and you will have access to the compensation scheme and a formal complaints procedure.