So, you considering moving out with a partner and buying your first home together? Great, you are progressing through life and starting a new chapter but, wait! Are you sure that getting a Mortgage is the right time? Are you earning enough to afford it all?
Your aim in shopping for a mortgage is to find one with an affordable interest rate and low fees. You are in it for the long haul, and this will take more time. A Mortgage Advisor, on the other hand, often gets a fee from the lender for bringing in the business. This fee can be based on the amount of the mortgage and will vary among lenders. A broker's goal, therefore, is to get you into a mortgage that maximizes their compensation. The 2008 market crash revealed that many brokers were getting their clients into mortgages that they could not afford over time.
Many First-Time Buyers in Doncaster simply assume that a Mortgage Advisor can deliver a better deal than they could get on their own, but this is not always the case. Some lenders may offer home buyers the very same terms and rates that they offer mortgage brokers (sometimes, even better). It never hurts to shop around on your own to see if your Mortgage Advisor is really offering you a great deal. As mentioned earlier, using a mortgage calculator is an easy way to fact check if your broker is offering you a good deal.
Mortgage Advisors are paid either by the lender or by you. If the fee is covered by the lender, you need to be concerned whether you might be steered to a more expensive loan because the commission to the broker is more lucrative. If you pay the fee, figure it into the mortgage costs before deciding how good a deal you are getting. And be sure to settle all fee issues up front before you sign anything or start working with a broker.
IMPORTANT: Spend some time contacting lenders directly to obtain an understanding of which mortgages may be available to you.
When a Mortgage Advisor first presents you with offers from lenders, they often use the term "good faith estimate." This means that the Advisor believes that the offer will embody the final terms of the deal, but this is not always the case. In some cases, the lender may change the terms based on your actual application, and you may end up paying a higher rate or additional fees.
This is an increasing trend since 2018, as some lenders are finding that Advisor-originated mortgages were more likely to go into default than those sourced through direct lending. By working through a broker, you may not have access to these lenders, some of whom may be able to offer you better mortgage terms than you can get through the Mortgage Advisor.
Legislative changes, most notably in the Mortgage Market Review in 2018, have resulted in a tightening of the rules with regards to mortgage “affordability” checks, the qualifications of all Mortgage Advisors, and the information Advisors must provide to borrowers about their services and their fees.
Since the changes, both lenders and Advisors must consider your financial situation and assess your affordability when suggesting suitable mortgages for you. Moreover, they must be able to prove they have done this.
Whilst this legislative revolution has made it harder to obtain a mortgage, it’s also made it far safer to use a Mortgage Advisor.
You can now trust they will undertake a full comprehensive financial assessment and therefore only give you a range of mortgages you will almost certainly be eligible for.
However, avoiding paying broker fees (though there are plenty of reputable fee-free Mortgage Advisors out there) to save a few pennies now could cost you thousands over the next few years if you opted for a bad mortgage.
Even if you think you do not need the advice of a broker and know enough about the mortgage market without one, you may be missing a trick.
Some Mortgage Advisors have access to a larger range of mortgages (such as via exclusive deals with lenders) and can help speed up the application process by getting you fully prepared and steering you towards mortgages you will most likely be accepted for.
If you are planning to employ the services of a Mortgage Advisor in Doncaster, do your homework first: ask friends and family for a recommendation, check the internet for reviews, and suss out their fee structure.
Ask them outright how many lenders they work with – the more lenders, the more options you have at your disposal and the more likely you could be to get a good deal.
Generally, there are three types of broker:
Tied brokers: These are usually recommended to you by a particular mortgage lender and only offer deals from that one mortgage provider.
Multi-tied brokers: These offer a limited range of mortgages from a panel of mortgage lenders.
Independent brokers: Also known as ‘whole of market brokers’, these investigate the entire mortgage market to find the best product for you. However, “whole of market” does not cover every single deal, as the name suggests.
This is because some lenders, like Mortgages Remortgages – Fee Free Mortgage Advisors, do not work with brokers and only offer mortgages to borrowers directly.
Since the legislative changes, Mortgage Advisors have to state from the outset exactly what range of mortgages they can offer. For the most wide-ranging advice and products, it is always advisable to choose an independent broker that offers a ‘whole of market’ service.
When deciding on whether or not to use a mortgage broker, a balanced approach may be the best solution.
Do your own research online first, ask your current bank and other direct-only lenders what deals they have available and then speak to a reputable mortgage broker to see what else is available and suitable for your personal circumstances.
That way you’ll get the holistic advice and information you need in order to get the very best mortgage for you.
When you make the decision to buy your first home in Doncaster, getting in touch with a professional real estate agent is typically your first call. But in order to be able to afford such a large purchase, a mortgage is typically necessary, which means a call to a Mortgage Advisor is warranted.
Rather than heading straight to your local bank to apply for and obtain a mortgage, working with a specialized Mortgage Advisors is often the better choice. Instead of offering you one interest rate and set of mortgage terms as banks typically do, a mortgage broker will be able to shop around with various lenders to find the best rate and conditions to suit your specific situation.
The mortgage application process can be a complex one, so your broker will help you iron out all the details and explain all the stipulations of the mortgage in terms that are easy to understand. While a number of lenders will be approached by the broker, only one mortgage application will need to be filled out.
Once all of the necessary paperwork is filled out in detail and completion, your mortgage broker will shop around with many different lenders to find the best rates and terms available. This is the key benefit of using mortgage brokers, as they have the ability to get in touch with a number of lenders and banks within their network.
Loan officers from conventional retail banks are only able to offer loan programs and interest rates from their specific bank. This would significantly reduce the odds of you being able to find out all the other options that are out there. Instead of applying for a mortgage repeatedly with a number of different banks, your mortgage broker will take all of that legwork out of the equation by approaching various lenders simultaneously on your behalf.
It’s your mortgage broker’s job to locate the best interest rate customized for you. For instance, if you can’t afford any more than a 5% down payment with a 30-year fixed-rate mortgage, your mortgage broker should approach lenders that offer those specific terms.
It should be noted that mortgage brokers will vary in the number of lenders that they have access to within their particular networks, since brokers will need to be approved to work with each lender. Of course, the more contacts that a mortgage broker has, the better.