Don't let moving make you sick

Melanie Bien shows how to take the stress out of buying a home and meeting the mortgage payments
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The Independent Online

Moving home is one of the most stressful things in life and so, apparently, is having a mortgage. A recent report from the British Medical Association reveals that home loans are making people sick because they worry about the monthly repayments.

But you can keep your sanity: there are ways to minimise the stress both of moving and borrowing.

Find your dream home

Don't want to deal with estate agents? Then try the internet as an alternative source of properties for sale. Some websites let you take a virtual tour, giving you a good idea of what the property is like, so you can cross it off your list if it isn't what you want. The web is also useful for researching an area, with information on schools, local amenities and pollution.

Being gazumped – when your vendor accepts another bid after agreeing to your offer – is one of the most stressful aspects of home buying. For a one-off premium, you can take out insurance from Legal & General to go towards legal and valuation fees if the sale falls through.

Pay for a full structural survey

Although expensive, it is worth every penny. Your lender's basic valuation ensures only that the property is worth what you are paying for it in terms of the market's going rate. It won't uncover dry rot, a condemned boiler or subsidence.

A full structural report buys peace of mind. And if the surveyor uncovers a problem, you can negotiate with the vendor to lower the price.

Use a broker and go for a fixed rate

Most people need a mortgage when buying, and a broker will do all the legwork for you. There are several good indepen- dent mortgage brokers who are paid by fees or commission: decide which arrangement you are most comfortable with and set up a meeting.

Many first-time buyers take out a fixed- rate mortgage for two, three or five years because they like the certainty of set repayments for a set time. There are some good deals: Leeds & Holbeck is offering 3.99 per cent fixed for two years, and the Portman 4.25 per cent over five years.

Insure the building and contents

Lenders insist on buildings cover when you take out a mortgage, but you shouldn't automatically accept a policy from your own bank or building society. "Lenders capitalise on the fact that buyers are already likely to be stressed," says David Hollingworth at mortgage broker London & Country.

"Because they have had enough, many buyers tick the box on the application form for the lender's ASU [accident, sickness and unemployment] cover, and buildings and contents insurance, instead of shopping around. While this cover will probably be fine, you are likely to pay over the odds."

Contents insurance isn't compulsory so many people don't bother taking it out. But can you afford to replace everything if your house is flooded or burnt down? Insuresupermarket.com saves time and trouble by enabling home owners to compare contents insurance policies from 60 direct insurers and major brokers in less than two minutes.

Protect your income

Sleepless nights spent worrying about what would happen to your home if you lost your job can be put to rest by taking out mortgage protection cover.

The most common form is ASU insurance, also known as mortgage payment protection insurance. Check whether your employer offers accident and sickness cover first. Expect to pay £4 to £6 per £100 of full cover, or £2.50 if you opt just for the unemployment element.

The disadvantage of ASU is that most policies pay out only for a year, whereas income protection, otherwise known as critical illness cover (CIC), pays out indefinitely until you return to work.

ASU is also written on an "any occupation" basis, which means that even if you are unable to do your current job, it won't pay out if there is some other kind of work you could do, no matter how menial. CIC, by contrast, can be written on an "own occupation" basis.

Get a broker to bear the burden

When David and Sian Reynolds bought their house in Reigate, Surrey, last November, they didn't want to have to sort out the mortgage and insurance arrangements themselves.

"I am very much the sort of person who would rather have someone else do it for me because I find it far too stressful to do it myself," says Mr Reynolds.

The couple approached mortgage broker Charcol because "it's a good brand name". They had a "very good" broker who organised their mortgage, extended their life cover – because they had a baby, Jay, at the end of last year – and arranged permanent health insurance (PHI) to cover Mr Reynolds' earnings. They also took out the buildings insurance suggested by their broker.

The couple now have a three-year fixed- rate deal from Northern Rock at 3.99 per cent. "I like a bit of certainty and want to know what our outgoings are going to be," explains Mr Reynolds. "I have a wife and young baby plus a job which has a variable income, so this allows me to plan ahead.

"I can't be bothered to trawl through websites looking for the best deal. And, anyway, the buildings cover they found me was cheaper than I had before. I also had to make a claim recently and Charcol handled that as well."

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