Buying a house is probably the single biggest purchase you will ever make so it's common sense to get professional advice to help you choose the right mortgage product for you. A mortgage is, simply, a loan to enable you to buy land or property. The loan is secured against your property which can be repossessed if you do not keep up repayments. Many mortgages will span 25 years, but this could be longer or shorter depending on the financial institution and your requirements.
With so much advice available online many people feel they no longer need professional mortgage advice. They believe they can save time and money by doing the research themselves and cutting out the middleman. In our opinion bypassing a professional advisor is a false economy because, in the long run, an independent financial expert will always save you time, stress and money.
A key reason to go through a broker is their expert knowledge and their professionalism. Advisors have to be professionally qualified to offer mortgage advice as it is such an important decision with far-reaching financial consequences. Since the financial crash of 2008, the legislation around mortgage advice has been strengthened offering you greater peace of mind than ever before. So what can a professional advisor offer you?
Professional mortgage advisors know the mortgage market inside and out. It's not just about the process of setting up a mortgage. A good advisor will have an up to date knowledge of all the different products on offer. They will be able to explain to you the conditions attached to each product and will be more likely to recommend products that you will be approved for as they work with lenders on a day to day basis. Brokers may even be able to influence the decision making process within the financials institution to get you a deal you may not otherwise be able to access. Mortgage advisors are usually completely independent which means they will not steer you towards a product that is unsuitable for you.
Getting mortgage advice from a professional advisor gives you protection. Since 2008 new legislation has been introduced to tighten that protection. If you apply for a mortgage independently and choose the wrong product, your ability to get out of it will be limited even if it turns out to be completely unsuitable for you. Mortgage advisors, like doctors and lawyers, have a duty of care to you, their customer, and if they fail in their duty, you have the right to complain and potentially claim compensation.
Mortgage brokers will also be able to advise you on important products such as Life Insurance or Mortgage Protection Insurance. These products can be complicated and its important to choose the best product to protect your family should the unthinkable happen.
It's always tempting to try to save money by avoiding using brokers (they do often charge a fee, although some work on a commission only basis) but mortgages are complicated to understand and time-consuming to arrange. There are many useful online comparison websites like Money Supermarket and Compare The Market that serve as good starting points but at the end of the day, there can be no substitute for good, old fashioned, impartial advice from a professional.
Access To The Entire Market
If you go directly to a bank or building society, they will only be able to offer you a limited range of products. By going via an independent financial advisor or mortgage broker you will be able to access a much wider range of products. Just remember to factor in any charges from the advisor into your budget. Most banks and building societies will also charge for setting up your mortgage so be sure to compare these and some of the no-fee options available.
Understanding What You Can Afford
Mortgage lenders will want to be sure you will be able to meet the repayment schedule on your loan and be confident that the home you purchase is worth the amount you need to borrow from them. They will assess your personal circumstances to make sure your existing financial commitments will allow you to make your monthly payments. All mortgages need a deposit and since the financial crash of 2008 the banks have been under pressure to increase the size of the deposit a borrower must provide. Mortgages of 90% are now almost unheard of and if you want to secure the best mortgage rates around you will need at least a 40% deposit.
Understanding What Is On Offer
Mortgages are based on the concepts of capital and interest. The capital is the money you borrow from the lender, and the interest is the charge the bank or building society add's to the loan. You have the option of paying back the capital + interest, known as a repayment mortgage or go for an interest-only option, which requires you to be able to demonstrate how you will pay back the capital at the end of the loan, usually via some sort of structured savings plan.
The biggest factor in choosing the right mortgage is usually the interest rate. This rate may be fixed for a set period, or be variable. Variable or tracker mortgages are usually based on Bank of England base rate and will move up or down as the central bank adjusts its rate.