Archive for December, 2007
What to Ask Your Mortgage Broker
As you may have already discovered, choosing a mortgage is quite a complicated business. There are so many pros and cons to weigh up in each case.
Your mortgage broker has the expertise to help you find the mortgage that’s right for you. But you may find you don’t even know what questions to ask your mortgage broker in the first place!
To start you off, here are some questions you can ask your mortgage broker!
• Can I take payment holidays? Sometimes it really helps to take a payment holiday – for example if you are going through a difficult time, like redundancy or divorce. It’s a good idea to check with the mortgage broker what the lender’s policy on “holidays” is. Of course, if holidays are allowed, they will have to be paid for by recalculating the interest over the course of that year. Some lenders charge a penalty or a fee in addition.
• Is there a restriction on overpayment? It can be helpful to overpay your mortgage if you can manage it. But lenders don’t always like it, as obviously you pay off your loan more quickly, which means less interest for them! Some lenders put restrictions on the amount by which you can overpay – for example a maximum of £500 per month, or 10% of the outstanding capital in a year. Plus they may impose swingeing penalties if you exceed this amount! If you think you may want to do this, ask the mortgage broker to find you one that doesn’t impose restrictions – or consider an offset or current account mortgage.
• If the mortgage is a special deal, are there extended redemption penalties? Most mortgages with special deals – such as fixed rate or discount rate – come with an early redemption penalty – that is, you will be charged a fee for repaying earlier than specified in the deal. For instance, if it’s a three-year discount rate, you would be charged a fee for repaying within the three years. However, some lenders also impose extended redemption penalties, where they continue to charge the redemption fee beyond the stated period. They can slip this past you if you’re not careful, so remember to check it with your mortgage broker.
• Is the interest calculated daily, or on an annual basis? When lenders talk about “daily” interest, they mean that every time you pay off part of the loan, the interest is recalculated on what is left. Obviously, this is better than the interest only being recalculated every year. This means that, when you are choosing a mortgage, it’s not just the interest rate you should be looking at, but whether it’s calculated daily or annually. A slightly higher rate on which interest is charged daily, is better than a slightly lower rate where interest is charged annually. So it’s important to check this out with your mortgage broker before taking out a loan.
Your mortgage broker is there to assist – but it does help to know what questions to ask!
Mortgage Advice – Why Would I Need It?
Why would anybody need mortgage advice?
Once upon a time, getting a mortgage was a simple affair. You saved up your deposit and made an appointment with your Building Society Manager. Then you meekly and gratefully accepted what he (it was usually he) deigned to offer you.
Nowadays, things are very different. There are hundreds of lenders, offering literally thousands of different products of all shapes and sizes – and they are all competing for your business. Which is nice. But the effect is that trying to research the market on your own is a daunting and very confusing prospect. So it really does make sense to look for mortgage advice.
• As well as there being thousands of mortgages available, every individual wanting a mortgage is a unique case. To find the right mortgage for you, all sorts of factors have to be considered: your income; the type of property you require; the size of deposit you have available; your credit rating; your mortgage preferences, e.g. fixed or variable rate; the length of mortgage term you require – the list goes on. You need mortgage advice to help you match the most suitable mortgage product to your specific position and preferences.
• You may also need mortgage advice to help you understand many concepts that may be new to you. For instance,
o What do “fixed rate” and “variable rate” mean? Which would be more advantageous for me?
o What is a tracker mortgage?
o Why might I want an interest-only mortgage?
o Why do some lenders charge an early payment penalty?
o How do I work out what fees are charged by different lenders?
• Mortgage advice can also extend to helping you fill in your application form The broker or adviser knows how the questions can be answered in the best way to get accepted.
• It may turn out that you require a special type of mortgage. For instance if your credit rating is not that good, you may need a bad credit mortgage. In this case, you really need mortgage advice to help you know who to apply to. If you apply to people who will certainly reject you, it will damage your credit rating further.
At the end of the day, although the mortgage adviser can assess your needs and recommend a specific product to you, it is entirely your decision as to which you choose. But without getting good mortgage advice, you will find it very hard to make an informed decision.
By: SeanH-9584
Mortgage Advice – Right Time or Wrong Time?
Starting the home-buying process for the first time? Your first thought may be “Help!”
Is this where you start looking for mortgage advice? Or is there a better time?
If you really haven’t a clue where to start, you could look for mortgage advice at this point. The mortgage advisor could assess your situation and your needs – for instance, help you work out what you can afford in the light of your other commitments, your credit rating, how large a deposit you can manage, etc. He/she can also help you clarify your thoughts as to how long a term you want your mortgage to last for.
This kind of mortgage advice would help you be clearer in your mind as to what price bracket to do your house-hunting in. There’s not much point in setting your heart on a particular house, only to find when you do your sums that you can’t afford it. Also, if you find a house that a lot of other people are after, the vendor might give you preference if you already have a mortgage lined up – or nearly lined up.
However, many people consider that the best time to start looking for mortgage advice is after you have found the house you want to buy. At this stage, the person providing the mortgage advice will be able to go straight into scouring the market to find the mortgage and the deal that is most suitable for you. He/she will still need to assess your needs and your situation
The truth is probably that there is no wrong time to look for mortgage advice. It depends on what you need, what your situation is, and what kind of mortgage advice you want. If you are new to the whole thing, it really helps to have someone assess your needs and help you know where to start. A really good broker or mortgage advisor would be only too happy to provide this kind of mortgage advice.
By: SeanH-9584