Mortgage advice – Should you use a mortgage adviser?

Getting a mortgage is one of the biggest financial decisions you will make, so it is important to get it right. This article will help you work out whether you should get a mortgage adviser, where to get free advice, how your bank might be able to help and which comparison websites you can check.

The mortgage market is incredibly competitive, and it can be hard to understand what exactly is on offer. There are many different providers and a wide range of products and rates available.

So, it is a good idea to talk to your bank, as well as a number of independent mortgage advisors, before making up your mind. This guide will take you through the routes to getting a mortgage and the importance of studying your options before making a decision.

Lenders (usually banks) and brokers must offer advice when they recommend a mortgage for you.

They will assess the level of mortgage repayments you can afford, by looking at your income as well as your debt repayments and day-to-day spending.

This means you should end up with a mortgage that suits your needs. Although lenders and brokers must offer advice in almost all cases, you might be able choose to reject the advice and find your own mortgage deal based on your own research. If you choose your own mortgage without advice, it’s called an “execution-only” application.

Getting advice, rather than doing research on your own, means that if the mortgage turns out to be unsuitable for you later on, you’ll have more rights when you make a complaint.

For example, you could make a complaint of financial mis-selling if the advice you were given turned out to be unsuitable for you. Not taking any advice means you have to take full responsibility for your mortgage decision.

If you don’t take advice, you could end up:

• With the wrong mortgage for your situation, which would be a costly mistake in the long run.
• Being rejected by your chosen lender, because you didn’t understand the restrictions clearly or what circumstances the mortgage was designed for.

A mortgage adviser, also known as an independent mortgage broker, is a specialist with in-depth knowledge of the market.

They can look at a range of mortgage products which suit your needs. It is a good idea to speak to a few of them to see what is on offer.

There are three main types of mortgage adviser:

• Some are tied to a specific lender
• Some loo k at deals from a limited list of lenders, and
• Some check the whole market for a wide range of products

Even ‘whole of market’ advisers do not cover everything.

They cannot advise you on mortgages that are only available if you go to the lender directly. All mortgage advisers must offer you advice when recommending the most suitable mortgage for you. This means you are protected and you can complain to the Financial Ombudsman if things go wrong.

Other reasons to use an adviser

• They will check your finances to make sure you can afford a mortgage
• They might have exclusive deals with lenders, not otherwise available
• They often complete the paperwork for you, so your application should be dealt with faster
• They will help you take all the costs and features of the mortgage into account, beyond the interest rate
• They should only recommend a mortgage that is suitable for you and will tell you which ones you are likely to get

Mortgage brokers might charge you for their service depending on the product you choose or the value of the mortgage.

Others will be free to you, but they will receive commission from the lender. They should tell you up-front how much you will pay for their services. You should also be told if an adviser is paid commission. Once your broker makes a product recommendation, they must give you a mortgage illustration document(s). This document is usually called a keyfacts illustration.

It is also important to do some research into the type of product and features you need before making a purchase or changing supplier.

There are other factors, which also contribute to the whole amount you pay back over time.

Look out for:

• APRC: (Annual Percentage Rate of Change) takes some mortgage fees into account as well as the interest rate and expresses it as a percentage.
• Deposit size: the higher the deposit, the lower the interest rate you are likely to get
• The standard rate: which your mortgage will switch to once your fixed rate deal ends.
• How often is interest charged? will it be paid daily, monthly, or annually? Daily interest works out cheaper.
• Flexibility: can you overpay your mortgage without being charged and can you take a break from making payments?
• Length of fixed or variable rate deal: do you want to be locked in for a long period. or have more flexibility? There will be charges if you switch out of a deal before it ends.

Bristol Mortgages Online www.bristolmortgagesonline.com Tel 0117 325 1511 

Bath Mortgages Online www.bathmortgagesonline.com Tel 01225 584 888 

Exeter Mortgages Online www.exetermortgagesonline.com Tel 01392 690 888 

       Email info@swmortgages.com

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