You must get a mortgage right because it is one of the essential financial decisions you will make. A mortgage advisor can scour the market on your behalf and recommend the best deal based on your specific situation.
First-time buyers, in particular, benefit from using an advisor because they remove the hassle of finding the right mortgage and save them time and money. If they can find you a mortgage with a low interest rate, they could save you thousands of pounds.
However, it is critical to obtain the necessary information to ensure that you have the best mortgage possible. To help you completely understand the mortgage facts, we’ve developed a list of critical questions you should ask your advisor before employing them.
1. Are you regulated?
Mortgage brokers in the United Kingdom are required by law to be registered with the Financial Conduct Authority (FCA) before they can practice. Ask them to show you their documentation or by checking the FCA’s register. This protects you from bad advice and gives you access to more lenders.
2. How much do you charge for your services?
Mortgage advisors may charge you a fee based on your needs. This fee could be a flat rate, an hourly rate, or a percentage of the loan amount. Others will be free to you but will be compensated by the lender.
Some advisors charge a fee for your first mortgage but agree to arrange any subsequent mortgages or remortgages for free. Some charge fees and receive a commission, but you should be informed about how an advisor is compensated and all costs associated with providing advice.
3. What type of mortgage would be best for me?
Though knowing what type of mortgage you want can help, there are so many different types available in the UK that it’s a good idea to seek the advice of your mortgage advisor. They will have the insider knowledge to determine which type is best for you based on your budget, preferences, plans, and market conditions at the time.
You must be honest and open with your mortgage advisor about your circumstances for them to understand what kind of mortgage is best suited to your budget. They can also assist you in making your accounts and finances more appealing to potential lenders, such as by providing advice on how to improve your credit score.
The amount of deposit you’ll need is determined by the price of the home you wish to buy and the percentage of that price that the lender is willing to lend. It is known as LTV, the ‘loan to value ratio.’
4. How much deposit do I need?
The amount of money needed as a deposit is determined by the value of the property you wish to purchase and the percentage of that value that the lender is willing to lend. It is referred to as the LTV, or loan to value ratio.
All lenders have different deposit requirements, but as a general rule, 85 percent – 90 percent loan to value (LTV) is the norm for a residential property – though an increasing number now accept 5 percent deposits, depending on your other circumstances.
The best mortgage advisor will be able to get you better deals if you have a larger deposit. This is because the greater your financial commitment, the more trust lenders have in you.
5. What fees must be paid to the lender?
You will most likely be paying the lender more than just your deposit and mortgage payments; they will frequently have other fees that you may not be aware of. Setup fees, valuation fees, and even cancellation fees can all be included. To avoid being caught off guard, ask your mortgage advisor to investigate any additional fees you may be required to pay.
They can also assist you in negotiating and evaluating if any of these fees are refundable if the transaction fails.
6. What documentation do I Need?
When applying for a mortgage, you will almost certainly be required to provide lenders with a substantial amount of documentation. You must ask your mortgage broker what kind of documentation you will most likely need to provide them with early in the process. They can also help you improve your application by advising you on how to use the documentation.
By asking these questions, you can fully understand the mortgage details to ensure that your broker matches you with a mortgage package that is right for you in the long run.