Expert financial advice:
mortgages

Mortgage Advisers

Mortgage advisers help you figure out what type of mortgage you need, how much can borrow, and how you will repay it. They then arrange your mortgage and take the entire process from start to finish. Mortgages can last over 25 years, so it's important you get indiviudal and accurate advice based on your preferences to secure the right mortgage for you.


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Types of Mortgage Brokers

There are three different types of mortgage brokers who are regulated by the FCA. They differ by the deals they can access and what advice they give.


Tied mortgage brokers

Tied mortgage brokers offer the products available from a single lender that they are affiliated or "tied" to. They will still be able to give you advice about different types of mortgages, but they will only reccomend one provider.


Multi-tied mortgage brokers

Multi-tied mortgage brokers offer access to a wider range than a tied broker, but it’s still a select group of lenders. Again, they will offer unique advice and choose what they think is your best option from the lenders they work with.


Whole of market brokers

Whole of market brokersoffer access to the full spectrum of mortgage products available. They are unrestricted in what they can offer you, so are often the best option. Any adviser that says they are ‘independent’ should also offer you access to ‘whole of market’ deals, and offer the option to pay a fee to ensure there is no bias towards a certain lender.


Types of Mortgages

There are different types of mortgage depending on whether you’re a first-time buyer, purchasing a second home, or buying abroad.


Buy-to-let

A buy-to-let mortgage allows you to borrow money to purchase a property that you intend to rent out to other people.

Remortgage

A remortgage allows you to access a sum of money while increasing your mortgage e.g. if you needed some cash for an extension, or simply because you’ve found a better deal.

Commercial

Commercial mortgages are loans on non-residential properties used for work.

Equity release

Equity release means still using your house while also getting a lump sum or steady income stream using the value of the house.

Offset mortgage

An offset mortgage is when you have both your savings and mortgage with the same lender, so your cash savings are used to ‘offset’ the amount of interest you are charged.


What does it cost to use a mortgage adviser?

Mortgage advisors can charge in a few different ways. Some charge a fee for their services, which is either via an hourly rate or a flat fee - charged either up front or on completion. Fee-based means that you know their recommendations are based on your best interests, and not on what will earn them commission.

Other advisers may profess to be “fee free” which means that their compensation comes from the mortgage lenders they work with. The FCA ensure that this structure doesn’t affect the independent advice you receive. Other brokers charge both a fee and also take commision from lenders for arranging deals - but sometimes offer to use some of that commision against the cost of your deal.

The benefits of using a mortgage adviser


Direct Deals

Direct deal mortgages mean going straight to a bank or building society. It has some drawbacks, as you are restricted in the mortgage products and deals on offer to you. However, this does mean you sometimes get exclusive deals unavailable to brokers. The main plus point is that this method involves no fees!

Even if you bank with that particular provider, you’ll get no preferential treatment. You are still subject to the same rigorous checks as any other customer would be. You may be offered a discounted mortgage rate if you already hold other financial products with their company.

Using a Broker

There are many advantages to using a mortgage advisor. By initially keeping your options open, you are able to compare the whole market to find the best mortgage for you. You will also have access to exclusive broker-only deals.

Mortgages are extremely personal and are made to suit your individual circumstances. It makes sense that the advice you get when choosing a mortgage is similarly personal, impartial, and tailored to your needs. Using an intermediary will help you find the best possible mortgage for you and arrange it on your behalf. Though it’s more expensive in the shorter term (because of their fees) but a lot cheaper in the long term if they manage to secure you a cheaper mortgage deal.

Choosing a mortgage?

Things to look out for.

APRC

This stands for Annual Percentage Rate of Change. It takes mortgage fees into account with the interest rate and expresses it as a percentage.

Deposit size

This greatly affects how much you’ll have to pay. The higher the deposit, the lower the interest rate you are likely to get.

Standard rate

This is what your mortgage will switch to after your fixed rate ends. You don’t want to get persuaded by a mortgage with an amazing initial rate, followed by a rip-off standard rate.

Interest

How often interest is charged will affect how much you have to pay overall. Daily interest is cheaper than monthly and annually charged interest.

Flexibility

Check how flexible your mortgage is - can you overpay without being charged or take a break from making payments without consequence?

Length of rate

Check how long you are locked into your fixed or variable rate deal, or if it’s flexible. You don’t want to get charged for switching before the deal ends.

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FAQ's

Everything you need to know about mortgages

Conveyancing is the legal term for when a property is transferred from one owner to another - a conveyancing solicitor does all the admin to ensure this process is legally valid and that you receive all the title deals to your property.

Not quite.Equity release means retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house. Remortgaging is when you pay off an existing mortgage debt using a new mortgage. This is usually done to save money with a lower interest rate, or to raise money by borrowing against equity.

Lenders use affordability calculators to work out how much you’ll be able to borrow. In general, you can borrow up to 4.5 times your annual salary.

In most cases mortgages are portable but this is subject to the lenders underwriting criteria at the time.

The amount you need to deposit depends massively on your credit score. You need at least 5% deposit to purchase a property (though typically this tends to be higher) or 25% for a rental property.

When you take out a mortgage, many lenders will advise you to get protection so that if anything happens to you, your family isn’t burdened with continuing the payments. In fact, some lenders will only give accept if you also take out life insurance for the value of your mortgage. We wrote more about life insurance and protection here.

Stamp Duty Land Tax must be paid when you buy a property or land over a certain price in England and Northern Ireland. This tax is different if the property or land is in Scotland or Wales. Currently, the threshold for residential properties is £125,000 and non-residential land and property is £150,000. There is a discount (relief) on the amount you pay if you complete the purchase after 22 November 2017, the purchase price is £500,000 or less, or if you’re a first-time buyer. You can use this calculator to work out how much you need to pay.

This figure is a highly unique amount that depends on many factors, such as the amount you borrow, the interest rate available and how long it will take to repay the mortgage.

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