Having watched Martin Lewis on Monday night and his investigation in to mortgages and looking at the advantages of using a mortgage adviser I thought this was the perfect time to go over the questions I am asked by almost every client. Hopefully answering a few of the issues. But we need to know more about the client before we can do or advise on anything. So let me ask the first question.
What do you want from your mortgage?
You will find lenders changing criteria as well as rates all the time. Last year an overhaul of the mortgage market was carried out and a number of changes were made. The main issues centred around affordability, making sure you only get a mortgage you can afford… While lenders use this to give them an overview of the finances they still look at income multiples to allow for a maximum borrowing. Everything changes, and new rules are heading our way first quarter next years with some further European rules coming in to the market. Having said all that, although lenders change what they can offer, us as borrowers are interested in saving money, buying a house and finding the right deal. This is where an independent adviser can help.
You go to advisers or brokers looking for advice, and this advice changes depending on their individual circumstances. But the questions we get asked are all very similar.
What’s the best mortgage?
No such thing as a best mortgage until we know you and what you want from it. Cheapest interest rates, are fantastic and look good on the adverts, we have all seen them, rates from 0.8%. The lenders are great for this, always pushing the interest rate, as do the comparison sites, But you wanted the best mortgage, not the cheapest interest rate? We need to review everything and take in to account the costs the lenders charge, product fees, valuation fees, solicitor fees and in some cases a get out fee. Do you know that some lenders have a get out fee at the end? They all have an early repayment charge (ERP) this is normally a percentage of what you owe if you pay off your mortgage before the end of the tie in period. But in some cases banks charge you a fee to LEAVE them at any time. OK this fee is normally under £500 but it still needs to be paid. So what is the best mortgage, It’s the one that suits you. The one that fits your needs and requirements. We often give you a number of options, sometimes with different lenders. A lender may be offering a great 2 year deal but the 5 year deal may not be as competitive. So we provide the options for you to make the informed choice as to what suits you.
How much can I borrow?
Lenders will only lend what they feel you can afford to pay back. That sounds very basic but lenders all have different calculators, Taking in to account pension contributions, student loans, credit cards and loans but not only these commitments but also looking at money you spend on food, gas electric, council tax and insurances. Even in some cases looking at your spending habits, and assessing the bank accounts. Sometimes we can be limited as to which lender we can use totally based on this affordability. Our first port of call for a mortgage isn’t the interest rate…. It is affordability. No point having a 0.8% interest rate if they will not lend the amount you need. To confirm a mortgage is affordable for you and the fits the lenders calculations you need to run the individual calculators and sometimes speak to the lender. Recently lenders have reduced the amount they will lend. It was often as high as 5 times income, this is now reducing to 4.75 times as a maximum, even if you have affordability the lenders still have a ceiling they will lend to. Again this could limit your options. One bank says no, but other lenders would have no problem in lending you the money. We have to find the right lender who says yes and gives you the most appropriate option.
My credit file is not that good.
No one in the UK has a universal credit rating or score, nor do credit blacklists exist. Each lender scores you differently and secretly. Rejection from one doesn’t automatically mean rejection from all. Of course, many firms adopt similar approaches to those who have had past problems, so it may feel as if there’s a blacklist. The high street lenders often have a tighter credit score, but some of the smaller lenders can be just as tight. If you are making late payments on a regular basis they will decline. We have high street lenders that will go back 3 years and still give you headline rate mortgages others look at the whole 6 years of the credit file. A credit file has a list of numbers. These numbers relate to the amount of payments you have missed, when you get to 8 missed payments this is classed as a default. A default is often treated in the same way as a CCJ (County Court Judgement) with lenders. If you have a copy of the credit file, the score you get is a guideline. It means nothing for a mortgage. Lenders look at conduct of your account and not just the final number. It is often a pyramid with lenders fitting in to groups. If it is declined by 1 lender other similar lenders would often come back with the same decline. You should always aim for the top of the pyramid. Finding the most appropriate deal that suits your individual requirements. But if this is not possible, cascade it down to the most suitable option that will accept the credit file.
It is your credit file and you are responsible for what this says. NOT the credit search company. If you are in any doubt get a copy of the credit file. www.noddle.co.uk will do this for free but most lenders use www.equifax.co.uk and or www.experian.co.uk both give you a 30 days free trial.
Will doing credit searches effect the credit file?
Yes it does and it is something you need to consider before approaching lenders.. Going from high street banks to building societies could well reduce any chances of you being able to get a mortgage anywhere. It is something I hate as most people like to look at options and with each lender having a different scoring system why would you not want to look at alternatives. This is not something that is going to change but a few lenders do what is called a soft credit search. A soft search can be seen by you but will not show on other lenders searches. If you are in any doubt before you speak to a lender make sure if they do a credit search this is a soft footprint and not something that would affect the chances of going to another lender.
Why use a mortgage adviser?
You are protected: They have a duty of care to you. To back up the recommendation they have to prove this is the right mortgage for you. Your adviser is qualified to give you advice: It is not just about the cheapest rates, an independent adviser can show you the differences and explain why without being tied to a specific company. A broker works for you and not the lender: They are on your side and knows the industry so the right choices can be made. It is not just about the mortgage: A broker is working for you to achieve the most suitable products, mortgages, life cover, income protection and other general insurance products. An independent adviser has access to all lenders and will deal with, solicitors, surveyors, lender, accountants, estate agents and basically project manage the move for you. A broker will work around you they understand you are at work so will arrange a meeting at a time and place to suit you, you do not have to go to the brokers office they will come to you and a time that suits you.
Why do you charge a fee?
Not all brokers charge fees, some rely on the commission they receive. Some will refund any commission and charge a fee or a combination of both fee and commission. Any broker needs to be transparent in the fees they charge. On all the documents you receive, fees should be stated and you will receive an illustration showing the fees and any commissions they receive. So ask around speak to different brokers and find out what they do and why. Buying a home is your biggest purchase, find the right person or company to help you through the mine field of house buying. The Estate Agents works for the seller. The Bank works for the shareholders. A broker works for you. You are employing him to find the right mortgage that suits your needs and requirements. He has options available to you that is not available to the public.
Why Good Mortgage Solutions ?
At Good mortgage solutions we treat everyone as an individual. Taking in to account your individual situation and circumstances, the initial appointment is free and you are under no obligation to accept any of the advice we give you. This initial meeting lasts approximately 45 minutes at a time and place to suit you. We understand you may not be able to make a meeting during office hours, so we make sure we have appointments available at times that suit you. We can come to your home or office, but if you prefer to meet me at our offices then we have meeting rooms available and plenty of free parking. If you decide you want to take up one of our recommendations then not only will your adviser be available but also we will appoint an assistant who will work on the mortgage with you. You will receive regular updates in the form of reports and phone calls to make sure the process is running as smoothly as possible. We deal with everything for you and project manage the process. The feedback we have received over the past 12 months shows what we have been doing works for us and our clients. We pride ourselves on the service we give people. We spend time getting to know you. “Good Mortgage Solutions Working With You For You”