By Chris Hall, of the Mortgage Advice Bureau in Norwich
mortgage market has changed significantly. Products are changing daily, as are the criteria the lenders use to determine how much they will lend and to whom. Keeping on top of these constant changes is key, and with this in mind it is important when choosing a mortgage or reviewing your current mortgage that you seek independent mortgage advice.
Why choose an independent adviser?
With the current financial climate it is more important than ever that customers ensure they receive independent mortgage advice. Recent market conditions have caused a reduction in the range of products available to both new and existing borrowers and there has been significant tightening in the criteria being applied by lenders. An independent adviser will have access to products from lenders regardless of whether they are available on the high street, via the internet, or only through a mortgage broker. The significance of this is that customers will have more options when choosing the deal to suit their needs. Banks and Building Societies will only be able to provide you with information about their range of mortgage products. The choice will be limited and may not meet your exact needs in terms of flexibility, charges, service or interest rates charged. Not all brokers are independent and they may be tied to a limited number of lenders. However, independent mortgage advisers can search the whole of the market and consequently have access to 1,000s of mortgage deals from over 80 lenders. An independent mortgage adviser will be able to offer advice on the various types of mortgages that are available and make recommendations based on your individual circumstances. They may also be able to offer advice on protection products, and provide some peace of mind as they can guide you through the home buying process.
How can I be sure I’ll get the best deal?
Regardless of how, or where, you find an attractive rate, the truth is that the best rate available will be dependent on your circumstances and therefore it is essential that you seek good impartial advice. An adviser will take into account relevant information such as your income and outgoings and work out the best deal for you according to your needs and affordability. The benefit of using an independent adviser is that you can be shown various mortgages from different lenders, that all suit the criteria you have discussed, giving you the opportunity to weigh up the pros and cons of each deal with advice from an impartial expert.
I’m a first time buyer – what deposit do I need?
Undoubtedly the choice of high loan to value mortgages for first time buyers has reduced significantly with a 10% deposit being the minimum with some lenders at the moment. However, there are various options available to help first time buyers get a foot on the property ladder including vendor paid deposit schemes and the Government’s Home Buy Direct shared equity scheme. By speaking to an independent adviser, they can advise you on the options available dependent on your circumstances and help you through the buying process.
My parents would act as a guarantor – would this help?
Everybody’s circumstances are different and this is one of the options to consider but with still thousands of mortgage deals available and with lenders changing their products daily, it is recommended that all first time buyers seek advice from an independent adviser.
What is an Agreement in Principle?
Independent advisers can not only help you save money on your mortgage payments, but also use their knowledge of the mortgage market to advise on how much each lender will be prepared to lend you. If you have seen an attractive rate, your adviser can arrange an Agreement in Principle which will certify exactly how much that particular lender will be prepared to offer you. Once you have this, you are free to put in an offer on a property!
My current lender is a well known brand, surely they will offer me a competitive rate?
The best rate available will depend on your personal circumstances. With the high number of lenders to choose from, and the spectrum of mortgage products that are available on the market today, no single lender can be the most competitive in every category. For example, a lender that offers great rates to first time buyers may not offer the most competitive remortgage deals.
What else will an adviser do?
As well as advising you on your mortgage needs, independent advisers frequently have access to a range of other products and/or services that will take some of the stress out of the home buying process. To use my own offerings as an example, a customer could benefit from home, income and family protection advice, free Buyer’s Protection insurance, instruction of a solicitor, and the chasing of relevant parties during the buying/remortgage process to make sure everything goes through smoothly. There is also an ongoing commitment to make sure you continue to benefit from the most competitive products. For insurance business we exclusively arrange products from Legal & General.
Is moving my mortgage worth the effort?
If your current mortgage special rate (i.e. fixed or discounted period) is due to expire, you will usually be transferred onto your lender’s standard variable rate which could result in an increase in your monthly payments. A saving of just 1% on your current interest rate would mean you pay £125 less a month, based on an interest only mortgage of £150,000. It’s important to check what early repayment charges your current lender may make before moving your mortgage.
For more information you can ring Chris on 01603 867254.