Taking out a mortgage is a big step. Whether it’s for your first home or as you’re moving up the property ladder. With the length of mortgage increasing and house prices rising considerably over the last few decades, getting the right mortgage is essential. It could save you money and come with other benefits.
You may be thinking of going down the DIY route when choosing a mortgage. But there are reasons why choosing to work with a mortgage adviser can be a good idea.
1. Searching the market
There are hundreds of mortgage providers to choose from, many of which aren’t well-known or don’t have a presence on the high street. This can make searching the market a daunting and time-consuming task. The expertise and experience of a mortgage adviser can be useful here. Whilst mortgage comparison sites can help, they will not include all the options open to you.
If this is a key reason for seeking the help of a mortgage adviser, it’s important to check if they’re ‘restricted’ or ‘independent’. A restricted adviser will only be able to recommend certain products or providers.
2. Understanding lending criteria
It’s not just identifying potential lenders that’s important but understanding how likely they are to accept you. Each lender will have their own set of criteria. Understanding what each lender is looking for can be challenging, a mortgage adviser will help you identify which lenders are most likely to approve your application.
This can be particularly useful if you’re not a ‘typical’ applicant. For example, if you’re self-employed, have only a small deposit or want to purchase an unusual property. Whilst some lenders will turn down applicants for these reasons, others specifically cater to them. Applying to lenders and being rejected can harm your credit rating. As a result, considering the criteria is important.
3. Securing the right rate for you
Interest rates have an impact on how much you pay each month. When you look at the interest paid over the full length of a mortgage, even a small difference can have a big impact. Taking some time to find lenders that are offering competitive rates can pay off now and in the future. However, it can be difficult to understand which rate is right for you. Lenders will advertise their best deals, but how likely are you to receive this? A mortgage adviser can help you to secure the right rate for you.
4. Explaining the pros and cons of different options
Whilst the interest rate is often what we focus on when looking for a mortgage, it shouldn’t be the only aspect. Your mortgage adviser can clearly explain the pros and cons of different deals with your situation in mind. For instance, if you’re hoping to reduce mortgage debt quicker, the ability to overpay when you choose could be valuable to you.
One important thing to note is when a deal would come to an end. Figures suggest that homeowners that fail to switch their mortgage at the end of the deal could be overpaying by as much as £4,500. This is because you’ll normally be moved to the standard variable rate (SVR), which often isn’t as competitive.
5. Help organising the mortgage application
The mortgage application process can be lengthy. There are documents to organise and lenders may need extra details from you. Going back and forth can be time-consuming, a mortgage adviser is able to check over the documents for you first, highlighting where issues may be caused. Purchasing a house can be a slow process, a mortgage adviser can help keep things moving for you during the initial phase and be on hand to answer questions.
6. Support in choosing insurance policies where necessary
Purchasing a home is often the catalyst for thinking about insurance policies. Could you still make the mortgage payments if you experienced long-term or critical illness? If you are your partner passed away, would the other be able to cope financially?
Insurance policies can offer a safety net and some form of protection. However, figures from Legal & General indicate that over a third of consumers who purchased a mortgage direct from a lender have no protection policy in place. Just over half had chosen to take out life insurance, potentially leaving their family in a vulnerable position should something happen to them.
The research also found that borrowers who used a mortgage adviser were overwhelmingly in favour of doing so again. Some 98% said they found the support of a mortgage adviser ‘valuable’. If you’d like support when seeking a mortgage product, please get in touch.