As there are many different mortgage products on the market, deciding on the best mortgage for you can be a really tough assignment.
There are so many routes to getting a mortgage that it can be a daunting prospect for anyone, including those who are financially savvy, and even those who have already had one or more mortgages. There are lots of important decisions you need to make regarding your mortgage – how much you need to borrow, the repayment method that suits you best and the type of interest rate you would prefer to be charged.
You can get a mortgage direct from a lender
if you've done your homework and are happy to make a
decision yourself. If not, you can take advice from an
intermediary such as a mortgage broker.
Seeking assistance from an independent mortgage broker can reap benefits. Whether you're buying a new home or remortgaging, a good mortgage advisor can help take the hassle out of the process and guide you to the best mortgages for your circumstances and needs. By not being part of any bank or building society, they have no vested interest in recommending one mortgage or type of mortgage over another. Instead they'll find the best mortgage deals for you.
Some mortgages are ideal if you already have a home and want to remortgage, others are better when you're moving to your next property - while others offer advantages for first time buyers.
Lenders have a range of different products designed to cater to the requirements of different types of borrowers. But it can be difficult to work out which deal is best for you, especially when you don't know what the options are.
Many products are related in some way to what is known as the Base Rate. This is the interest rate set by the Bank of England's Monetary Policy Committee each month. This rate is et according to the Committee's belief of what would best help the UK's growth without pushing inflation through the roof.
The base rate affects how banks and businesses can borrow money, so is not directly responsible for housing loans. Banks and building societies take note of both the current base rate and what they feel will happen in the future when they design new mortgage products.
While some mortgages are directly linked to the base rate, many are not. However, they will be affected by any change in the rate.
Just to make it more complicated, there is a second rate, which is at least equally important to lenders. The London Inter Bank Offer Rate, or LIBOR, is the rate at which banks and building societies lend each other money. Few mortgages are directly linked to LIBOR - although some are - but the rate does have an effect on the market. The current credit crunch is, in part, down to LIBOR's volatility.
When we talk about the different mortgage types, we are generally referring to mainstream borrowers - those who are employed and have payslips, and don't have any black marks against them. Those that don't fit into the standard criteria, if you're self-employed, earn a significant income through means other than a standard salary or have a significant part of your income made up of commission or bonuses, may have to apply for a different kind of mortgage - the non conforming product.
Most of the mortgage types will still be available to you but they may come from non-high street lenders. Because you don't fit the standard underwriting criteria for mainstream mortgages the lender will need to individually assess your application and specialist firms are more geared up to deal with this.
So, the good news is that you can get a loan. But there's bad news too. Firstly, you're likely to need a larger deposit. In most cases you'll need at least 25% to put down - or equity in the property - and in some cases you'll need more. Then there's rates. Lenders will consider you a higher risk and will charge you accordingly. Deals for non conforming borrowers will be more expensive than their mainstream counterparts. Fees will also be higher.
If you are self-employed or run your own business, don't assume that automatically you won't be eligible for a mainstream deal. Most high street lenders will give you the same deal as anyone else if you have three years' certified accounts, and some will help you if you have less than that.
Remember though that these are short term steps. No matter
what type of borrower you are, if you make your payments on time
for the first couple of years, you'll prove to the lender that
you are a good bet and they will fall over themselves to offer
you mainstream deals.
Simply contact an expert for a no obligation mortgage quote.
Your home may be repossessed if you do not keep up repayments on your mortgage
A FEE MAY BE PAYABLE TO THE BROKER FOR MORTGAGE ADVICE IF YOU PROCEED WITH AN APPLICATION, OF UP TO 1% OF THE LOAN AMOUNT. THE BROKER WILL PROVIDE YOU WITH DETAILS BEFORE YOU ARE ASKED TO COMMIT.