In today’s day and age, the world is witnessing a lot of financial innovations. As our needs increase, finance entities find different ways to keep at par with the demand. One such credit option that most people opt for are mortgage brokers. Essentially, any person or link that arranges a mortgage deal between a lender and a borrower can be described as a mortgage broker. However, with market full of options, it can get tough to zero in on the best broker to get a mortgage. To that effect, we bring you some mortgage advice to ensure that you find the right mortgage broker:
- Research and weigh your mortgage options side by side To understand the information your mortgage advisor has in store for you, it is important that you choose the best available options for yourself. This way, you are clear about the basics of mortgage lending and borrowing. Most mortgage brokers in the UK, USA or world over would approach you once your scouting for a lender begins.
However, it is highly possible to get lost in all the jargons and terms that a layman does not easily understand. So, in order to grasp the entire procedure- it is advisable that you do your own research first. One of the most important aspects to consider before consulting a mortgage broker is to find the different mortgage lenders available in the market. The next tip covers all the available options for you to consider before you borrow for your dream house.
- Figure out the different types of mortgage lenders and then see which type fits you the best Most mortgage lenders in the world are bankers. So, as a borrower, you would generally apply to the top 5 and figure out which one approves your loan. With a mortgage broker, the effort of getting your application rejected reduces considerably. For people who know the thicks of the trade, a glance through your application would help them understand which lender is the best for you as a borrower.
Apart from banks, you can also consider choosing these type of lenders in order to procure the right loan:
- Retail lenders Retail lenders can be described as mortgage lenders which directly offer loans to the consumers and not through an institution. The most common type of this lender is a banking institution. Apart from that- this list also includes mortgage bankers and credit unions.
- Portfolio lenders A portfolio lender is perhaps one of your best options to understand tailored lending. They put up their own money as per what is convenient to them. This is appealing to many borrowers who cannot go through banks.
- Direct lenders While the distinction between retail lenders and direct lenders is minimal, you can distinguish them based on the specialty products they offer. Additionally, most direct lenders make their own type of loans.
Now that you are aware of the different types of lenders in the market, it is advisable to consult a mortgage broker and weigh all your options before finalizing one. To make your research more useful, you would also need to first understand the different type of loans available in the market.
- Ask your mortgage broker which type of loan to choose A mortgage broker would take you through many options. When you want to consider a mortgage, knowing all the available options is a good way to start. The different types of mortgages that most mortgage brokers in UK will connect you to comprise of the following:
- Repayment Mortgage This is the most common type of mortgage. When you go for a bank or an established entity, you would generally opt for this type of mortgage. In this, you would need to pay back your amount with a fixed or a variable interest on rate on a monthly basis.
- Interest only Mortgage A mortgage advisor would help you choose if this loan makes more sense for you since it can save you money on the principal amount. As the term suggests, you would only need to pay back the interest on the mortgage over the stipulated duration.
- Standard Variable Rate Mortgage This type of mortgage is more profitable for the lender as compared to the borrower. After a certain pre decided term, the lender can change the rate applied.
- Tracker Mortgage Tracker mortgages or rates give you the flexibility of paying different rates to the lender based upon the pre decided terms. Now, if you consider the Bank of England tracker type of loans- then you will have a pre decided interest rate, on top of which you can add the fixed amount based on the principal amount.
The other type of loans your mortgage broker will connect you to includes the following:
- Fixed rate Mortgage
- Cashback Mortgage
- Offset Mortgage
- Understand the difference between a mortgage lender and a mortgage broker
In order to pick the right mortgage broker and choose the best option, you need to understand the fundamental differences between a mortgage broker and a lender. Essentially, a lender is the entity that offers you the loan. However, a broker would connect you to the best options available in the market. It is advisable to first analyze your financial background and see the red marks on your application list. If there are multiple which may result into rejection, then considering a broker is always helpful.
A mortgage lender would offer you the different products that are available with them. A mortgage broker on the other hand would act as the link between you and the lender. Since, its their bread and butter- they would earn based on accepted applications. Hence, they function efficiently by drawing out your needs and connecting you to the best possible lender.
- Ask around for recommendations and take others experience into consideration One very useful trick to picking the right mortgage broker is by asking people around. Speak to your circle. Consult friends and families and analyze the local mortgage brokers available for you. When you understand the procedure your acquaintances have gone through, then you can easily trust the broker.
- Do not get lured by false marketing
Many borrowers get lured by low interest rates and apply to the lenders directly. The way the finance world works is by placing trust on the right borrowers. Hence, people with an impressive credit record get lowest interest rates. For borrowers, for whom an objectionable record precedes them, getting the a low interest rate is not possible.
In case your credit score is not good, then applying directly to the lender is only going to result in an unwarranted background check. The odds of this check turning in your favor are very low. Hence, picking a mortgage broker ensures that you get a complete idea about the probability and an estimate of the interest rates that you can procure.
- Ask for a well-analyzed comparison of the lenders For most people working hard to make ends meet, sitting and analyzing the intricacies of the lending process is tough. But, there are certain criteria: such as proven acceptance rate, different types of mortgages available, the interest rates offered- which help you choose one lender over the other. Now, as somebody who deals with lenders and borrowers on a daily basis, a broker would help you recognize the fine print and give you an analysis of the nuances.
So, in order to make the most of your contract with a mortgage advisor- ask him for the difference as well as the pros and cons of different types of lenders.
- Go through a reputed entity in order to not get conned We are all aware of the different scams that people encounter. However, if you want to pick the right broker, go online through a reputed entity and compare well. In today’s digital age, there are many online entities that offer you ratings and reviews on different mortgage brokers. It is always advisable to weigh all your options and not just settle for the first one. An online portal would help you see the different consumer experiences. You can also find out about the commission or the fees charges. Depending on your budget, you can choose which broker fits in your criteria the most and contact them.
One trick that we have always found useful is going through reviews and deciding which broker specializes in the kind of mortgage you are looking. Also, read for trustworthiness through the reviews and make your decision.
As a key takeaway, it is important to realize that even though most people do not understand, every player is important in a mortgage transaction. The mortgage advisor you consult, as well as the mortgage broker, is as important as choosing the right lender. We at FMA (First Marketing Agency) use a well-researched procedure to connect you to the top mortgage brokers suited to you. You can simply fill out the form below and get started on matching you to the best mortgage broker tailored specifically to you and your location.