Talk to a mortgage broker
? Update 29 September 2020. Due to the coronavirus pandemic and the financial impact it has had on the mortgage market – namely, that many mortgage lenders have tightened their lending criteria as a result of the economic fallout – it's arguably more important than ever to use the help of a qualified mortgage broker when you're looking to either remortgage or take out a mortgage.
However, demand on mortgage brokers and lenders is particularly high at the moment. so the likelihood is that in the current climate, you may experience delays when either instructing or working with a broker. ?
Once you've benchmarked a good rate from MrMoneySmart, see if a qualified mortgage broker can beat it.
using a mortgage broker
They scour the market to find you a good mortgage deal. By using one, you swiftly cover a huge slew of lenders, and get added clout with them to ease your acceptance as well as an extra layer of protection if things go wrong.
Brokers will also be able to advise you on Help to Buy mortgages and other Government mortgage schemes (incl shared ownership) if you're eligible – tell your broker upfront if that's what you're looking for.
Qualified mortgage brokers are also worth their weight in gold, because they know key details about lenders' criteria. So they would know if the lender you're thinking of doesn't lend on properties above shops, or in council blocks – so they'd be able to recommend a different lender who does.
But, the key is to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend brokers. They may even work from the same office. But you are NOT tied to using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations – many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price. Not all brokers are the same. Some are limited in what they can offer you.
Here are the 3 crucial questions to ask...
1. Can you get me a mortgage from any UK lender, right now?
This finds out if your broker can source you ANY UK mortgage. Not all can so it's important to know which you're dealing with. Here are some of the possible answers:
'NO.'
'We check all products available to brokers.'
'We check all lenders.'
Just be clear on what your broker is offering. Weigh up the need to check every deal, your willingness to do some legwork yourself, and if you're happy paying a broker fee. Once you've found a broker you're happy with, you need to ask them the next questions to find out if they're the best broker for you.
2. Do you charge a fee?
This tells you how the broker makes their money from your mortgage deal. Brokers have two possible sources of income, which are:
Commission
Fees
3. Are you qualified?
You need to find out whether a broker is qualified to advise you. Make sure you're getting advice from a qualified mortgage adviser (the most recognised qualification is called CeMAP). Your broker should assess your needs and eligibility before recommending the most suitable product for you. This route also offers the most protection for you as a consumer.
If the advice turns out to be wrong, the Financial Ombudsman will be able to investigate any wrongdoing. If you chose a product from an information-only service, you'd have no comeback if you made the wrong choice.
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