We understand small amounts of money; we know what they can buy. £200,000 is harder to grasp; you can't fit it in your pocket. The desire to acquire, combined with stress of purchase, can make people do funny things. With this in mind, here are a few tips to review when getting a mortgage.

Watch out for 'Deal Of A Lifetime', deal that seems too good to be true. The company may be saving money by cutting back on their level of service.

When getting a fixed rate: get a written statement which details interest rate, how long rate is fixed for, and conditions attached.

When interest rates fall: try and leave your repayments as they are. You will therefore be paying more than minimum each month. You'll repay your loan much earlier. When rates rise again you may not have to change your payment.

Consider a fifteen or twenty year term. Try to pay off your mortgage quickly. Use a mortgage calculator with an amortization function, and see what's possible.

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 ratio of your total mortgage payment to your total income.

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

Try not to 'churn' your mortgage. Each time you refinance you'll probably incur completion costs and non-refundable fees.

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.

First ask yourself: do you really need it?

Can you manage without it? Is it for something frivolous, like a holiday? Could you get money by other means: part-time job, from a relative, sale an asset?

Don't put a monkey on your back if you can avoid it.

A loan varies according to:

The amount borrowed;

The interest rate;

The type of rate (fixed or variable);

The term (repayment time in months or years);

Deposit (downpayment);

Associated fees (broker, origination, prepayment etc.);

Insurance required by lender.

You are buying money for more than it cost lender. Simple.

It's a mistake to only care about interest rate; there are also arrangement fees and prepayment penalties to consider. Many 'no fee' credit lines have a pre-payment penalty. This is how brokers and lenders make their money. Work out total cost of your loan before committing.