For most of us, getting a mortgage is one of the biggest financial commitment we will make, so it’s important to get it right. Many of us will get advice from multiple sources before buying a new mobile phone, TV or car, yet do we invest a proportionate amount of time into mortgage advice for a decision worth many times the value of these items?
The mortgage market is incredibly competitive with many different lenders offering a wide range of mortgage and insurance products, often with varying rates available. Add to that a range of comparison websites showing different selections of lenders and products, but with some lenders refusing to be listed on these sites, so it can be hard to understand exactly what your choices are.
So with this in mind, and the addition of a wide range of terminology and abbreviations (see our Mortgage and Insurance Dictionary), this guide will take you through the different ways of getting a mortgage and the importance of knowing your options before making a decision.
What is a Mortgage Adviser?
A mortgage adviser, or mortgage broker, has achieved specific qualifications, regulated by the Financial Conduct Authority (FCA) to be able to provide advice on finding the right mortgage to meet your needs. Having gotten to know your financial circumstances, they will be able to recommend mortgage products that are most suitable for your circumstances.
Mortgage advisers will also manage the process of applying for and completing your mortgage application. They will take on a lot of the paperwork needed and also chase the other parties involved in the process (Estate Agents, Solicitors and the Lender for example*). The process of applying for, and being accepted for a mortgage can take anything from a few days to a few months and our advisers will be with you every step of the way. Basically, they will remove a lot of the stress and hassle from the process for you.
If you choose to receive mortgage advice through a mortgage adviser, they will have a duty of care to you. They must be able to justify the mortgage(s) they recommend to you. Mortgage brokers also have to provide you with a document called a “Keyfacts Illustration”. This document summarises your mortgage details and all relevant information on your mortgage application. This includes information such as your monthly mortgage repayments, the term of your mortgage, how long any special ‘deals’ last for and any penalty charges that could apply. It also includes details on any fee your mortgage adviser charges and/or commission they will earn.
An experienced mortgage adviser can also potentially save you time as they will know which lenders will be happy to provide mortgages for specific circumstances or requirements. For example, some lenders may not accept any history of bad credit. Other lenders will have different criteria for self-employed applicants or the acceptable length of probationary periods.
Lastly, mortgage advisers can also offer advice on relevant insurance and protection products, such as critical illness cover, income protection and buildings and contents insurance.
The Benefits Of Using A Mortgage Adviser
Mortgage advisers have expert knowledge in the market with in-depth knowledge of mortgage and insurance products.
They should also have access to software tools that enable them to search for mortgage deals much faster and thoroughly than you can do yourself.
Unless they are tied to a specific lender, mortgage advisers are able to look at a wide range of mortgage and insurance products which could suit your needs.
Some mortgage advisers may have access to exclusive deals with lenders, not available through the high street.
They will often complete the paperwork for you, so your application should be dealt with faster and with less stress than having to do it all yourself.
Mortgage advisers will help you calculate the level of monthly mortgage repayments you can afford, by looking at both your income and your outgoings.
They will help you understand all of the costs, fees and specific features of the mortgage, beyond just the interest rate.
All mortgage advisers must justify their advice to you when recommending a suitable mortgage product(s).
They should only recommend a mortgage product that is both suitable for your situation and one that you are likely to be accepted for.
Applying for mortgage products that you are unlikely to get can have a negative impact on future applications.
One of the main benefits of using a mortgage adviser is that you are protected by, and can complain to, the Financial Ombudsman Service if the mortgage turns out to be unsuitable. (This option isn't available if you apply without taking advice
Mortgage advisers can also help you with special mortgage requirements, such as buy-to-let, second properties, shared ownership or equity release schemes.
The Risks Of Not Using A Mortgage Adviser
Not taking any mortgage advice means that you will be taking full responsibility for your mortgage decision.
If the mortgage you select turns out to be unsuitable for you in the future, you have fewer rights if you try to make a complaint to the Financial Ombudsman Service.
Choosing the wrong mortgage for your specific situation could be a costly mistake in the long run.
If you are rejected for a mortgage you have applied for (maybe because you didn’t understand the circumstances the mortgage was designed for), this can impact further applications.
Our top tips when looking at mortgage options
When you begin to look at mortgage options, whether you are a first-time buyer or remortgaging after your current deal has expired, it is important not to just look for the lowest interest rate. There can be many other factors which will contribute to the total amount you end up paying back over the mortgage period.
Some topics to discuss with your mortgage adviser:
- Ask them to explain all of the fees involved in the mortgage; interest rate, mortgage fees, early repayment charges and set-up fees for example.
- Find out what the lender’s standard variable rate is, which is the rate your mortgage will switch to once your fixed-rate deal comes to an end.
- Talk about deposit size (generally, the higher the deposit, the lower the interest rate you are likely to get). This can include shared ownership schemes if you are struggling to raise a deposit.
- How often is interest charged? Is it to be paid daily, monthly or annually? Daily interest works out cheaper.
- How flexible is the mortgage product? Can you overpay your mortgage without being charged? Can you even take a ‘mortgage holiday’ from making payments altogether?
- Think about whether you want a fixed or variable rate deal. Do you want to be locked in for a long period, but with the surety of what your payments will be?. Or do you prefer more flexibility but have your payments fluctuate each month?
What your mortgage adviser should do next:
- Thoroughly explore your circumstances, income and expenditure.
- Explain the different types of mortgages there are and any current deals available.
- Advise you on which mortgage(s) they feel meet your requirements.
- Provide you with a clear explanation as to why they are recommending a particular mortgage deal.
Paperwork to take when meeting your mortgage adviser:
- Proof of identity, such as a passport or driving licence
- An original bill or bank statement
- Your last 3 payslips (if employed)
- P60 documents for the last 2 years (if employed)
- Your tax returns (if self-employed)
- Details of any additional income such as bonuses, overtime or allowances
- Bank statements to demonstrate outgoing payments
Mortgage Solutions NI has been trading since 2005 and currently have over 70 mortgage advisers across Northern Ireland. We have delivered over 4000 thousand mortgages totalling over £400 million in lending and protected over 2,300 customers in 2019. We can access over 2,000 mortgages from over 50 of the top UK lenders and have access to special mortgage deals not available on the high street.
Please do not hesitate to contact us today to arrange a meeting or call with one of our experienced mortgage advisers, they are always happy to help with any questions!
Your property may be repossessed if you do not keep up repayments on your mortgage
Some buy to let mortgages are not regulated by the Financial Conduct Authority.
You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone. This is a referral service.
The services promoted here are not part of the Openwork offering and are offered in our own right. Openwork Limited accept no responsibility for this aspect of our business. These services are not regulated by the Financial Conduct Authority.