Use an expert
A mortgage can be a complex product sometimes with considerable human factor in the process. Whilst many lenders base their decisions on credit scores, some manually underwrite each mortgage and will make exceptions to the normal criteria to give borrowers extra flexibility. In the hands of an expert adviser who knows the lenders well, borrowers can often get better outcomes than applying to the lender direct.
Your broker needs to take into consideration all of your circumstances to offer a mortgage which is suitable. Resist the temptation to just tell your broker the mortgage amount and term you need. It’s a good guide but you will get a better result by explaining what you are trying to achieve with the mortgage and why, so your broker can see the whole picture. In most cases you will be asked for information which on the face of it doesn’t seem to relevant. Go with it – your broker has your interests at heart.
A good broker will keep asking why?
By asking yourself “Why?” you may end up with a totally different mortgage to the one you first considered:
- Why take a repayment period over the longest possible term to keep the repayments low when you can easily afford to pay more each month? By shortening the repayment period you will pay less in interest and pay the mortgage off sooner.
- Why take a mortgage term which finishes when you and your partner are 65 if you know your partner wants to retire at 60? Consider a shorter term if you can afford it so the mortgage is paid off when your joint income drops.
- Why consolidate all of your unsecured credit when some of it is at lower interest rates or interest free. Can you afford to pay that separately?
- If you are thinking of settling the mortgage in a couple of years why take a mortgage which offers the lowest rates and repayments but has higher lender fees or early repayment charges? It may be cheaper to pay a little more each month but enjoy a far lower settlement figure in two years time – do the maths or ask us to.
- Why take a five year fixed deal when a three fixed is cheaper and you intend to move in two to three years?
- You want £250000 which means borrowing at just over 75% mortgage to value (LTV). Why not borrow £245000 which falls in to the lenders lower LTV and potentially pay 1% less per annum?
- You receive your income erratically in chunks – maybe you are self employed. Why not choose a mortgage which allows you to make lump sum payments with out penalty to reduce the balance and pay the mortgage off sooner?
There are no hard and fast rules and the points above should not be taken as advice – simply points to consider. Regulated mortgages are offered with full advice and recommendation from your broker. This is a regulatory requirement to protect consumers and your broker will be mindful of factors such as those above when making a recommendation. If the mortgage is not regulated you may not get advice so you should be increasingly mindful of asking yourself why?