Getting a mortgage can often be a daunting and complicated process, especially if you are a first time buyer. It is very important to ensure you not only choose the right lender, but also that you don’t end up paying a higher rate than you need to.
It is much harder to get a mortgage these days, with lenders required to perform a much larger number of checks on borrowers than in previous years. There are thousands of mortgages out there, so it is just a case of making sure you choose the right one.
There are three main approaches that will help you to reach the right decision when it comes to choosing the best mortgage for you. It doesn’t matter which one you do first, but hopefully they will leave you feeling clear on the decision you need to make:
Check Mortgage Comparison Tables
These comparison tables are fantastic for comparing a wide range of data in one simple and easy place. Although you might instantly focus in on interest rates, there are many different features that you will need to consider as well.
How long the mortgage lasts for is a very important piece of information to find out. Whether you are getting a fixed, capped or discounted rate on your mortgage, you need to know when it will come to an end and what fees you will be charged should you decide to opt out early.
The maximum LTV on a mortgage is the top amount based on your property’s value that a lender will offer you. If this percentage is low and your deposit is also quite low, then the mortgage will not work for you. If you have a low deposit you will need to make sure the lender will offer you a high LTV.
Rates, interest and flexibility all need checking too, as if you are on a discounted rate, you need to know what rate you will be put on next. Interest on mortgages can be charged as often as daily or as irregularly as annually - its important to make sure you find out. Finally, if you may be in the position to make larger repayments now and again you need to find out what level of flexibility you will be given regarding overpayments.
Speak to Your Bank
Talking to your bank is a good step as you are already a customer with them. If you currently have a mortgage with your bank and have been a loyal customer to them for a while, then they may well offer you a good deal in return for your loyalty.
It is important to not get too sucked in to the offer they give you though, as they are not going to offer you any information on competitors deals, so it is important to step away from the situation at the end and balance out all your different options.
Speak to a Mortgage Broker
There are two different options when it comes to choosing the right mortgage broker to get involved with. Some will only offer you information on mortgages, whereas some will actually offer you advice as well. Make sure you choose one that will give you honest and genuine advice.
Another thing to look out for with mortgage brokers is to ensure you speak to someone who will give you advice on the entire market available to you - some will only offer advice on a limited number of lenders.
There are many benefits to using a mortgage broker, having an expert give you their advice is extremely valuable on such an important financial situation, and they may even have an exclusive deal with a lender they can offer you.
You also have more rights if you choose a mortgage suggested by a broker which then turns out to be unsuitable, and they will also help you fill out paperwork and tell you upfront which mortgages you are most likely to get.
There are many different rates and programs when it comes to mortgages, so it is important you have all the information and advice you need before you make the big decision. Don’t rush into anything and make sure you have considered all your options first.
This article was written by Matthew Fine Managing Director of Hunters Marylebone branch.