Have you applied for and been approved for a mortgage and are wondering what potential penalties to look out for? As well as the early repayment penalty, you need to make sure you don’t get a penalty for underpaying your mortgage or a penalty for not drawing it down.
What are the conditions for taking out a mortgage?
The mortgage is taken out non-cash, in two ways. In one lump sum and gradually. As a rule, you can draw down a mortgage loan within two days of meeting the conditions for drawing down the mortgage, which include the conclusion of a purchase contract, insurance of the property and vindication in favour of the bank, a proposal for the entry of a lien into the Land Registry, proof of payment of part of the price from your own funds and usually the establishment of a current account with the mortgage provider.

Penalties on mortgages include those for underdrawing the mortgage.
You usually have 12 months from the signing of the mortgage contract to draw down the mortgage. Especially if you are taking out a mortgage to renovate or build a house, it may happen that the costs are lower than you expected and you do not draw down the agreed amount.
For some banks this is not a problem, as long as you fit within 20% of the agreed amount. Otherwise, you have to expect a penalty of 5% of the unused amount.