With hundreds of different mortgages to choose from, hunting out the best deal to suit your needs can feel a bit like trying to find a needle in a haystack
Access to more mortgages
If you aren’t sure which type of home loan is likely to be right for you, it’s a good idea to talk through all the available options with an independent mortgage broker. They will be able to research the whole market on your behalf, rather than you having to trawl around numerous different lenders.
A spokesman for financial website Moneyfacts.co.uk said: “An independent mortgage broker will look for the best mortgage for you. They aren’t on the lender’s side, they’re on yours, and they’ll give you access to far more products than if you went direct. You’ll get unbiased advice and could choose from a range of lenders and subsequent products, rather than being restricted to the single range of the lender you go to. They also know the background criteria that a lender has and can bring this experience to bear when advising you and processing your application.
Greater buying power to secure the best mortgage deals
“Then there’s the fact that, because a mortgage broker may put a lot of business to a particular lender in a year, they can exert influence and chase things in a way you just can’t do by yourself – and that can be invaluable should things get held up.”
When you speak to a broker, they will start by asking you about your individual circumstances, including your income, how much you want to borrow and over what term, and how much of a deposit you have to put down.
They will then to talk you through the various deals you are eligible for, and can explain how the different types of mortgage work.
Types of Mortgages
Fixed rate mortgages
If you choose a fixed rate mortgage, you’ll have peace of mind that your monthly payments will remain the same for the duration of the deal. Capped rate deals, however, are variable rate mortgages, so your payments could change over time, but there is a cap on the rate you will pay, so you know your payments can’t rise above a certain level.
Discounted mortgages are also variable, and usually offer a discount off the lender’s standard variable rate for a set period of time. Another variable option is a tracker mortgage. As the name suggests, this kind of mortgage usually tracks the Bank of England base rate, plus a set percentage. So, if you go for a tracker which track base rate plus 2%, as the base rate is 0.5%, your payable rate would be 2.5%. If the base rate increases to 0.75%, your mortgage rate will go up to 2.75%.
Alternatively, if you have significant savings, your broker might suggest that you think about an offset mortgage. With this type of mortgage, your savings are offset against your mortgage, so instead of earning interest on them, you don’t pay it on the equivalent amount of your mortgage debt. This can help you to pay off what you owe more quickly. You can still access your savings at any time, so this type of mortgage is often a good choice for people who are self-employed and build up tax savings over the year.
Once you’ve narrowed your choice of mortgage down, your broker will let you know the monthly costs, as well as any arrangement fees you will have to pay. They will then be able to help you with the application process, and answer any questions you might have, such as how long it will typically take for your mortgage to be processed.
Mortgage broking fees
When choosing a broker, check how they are paid. Some, such as London and Country mortgage brokers, receive commission directly from the lender, which means there is no cost to you for their advice. Others, however, charge a flat fee or percentage charge, so make sure you understand exactly how much you’ll pay for their advice at the outset.