If you prefer to take advantage of low rates on new mortgage loan (First time buyer / Buy to let or remortgage), the following point should be considered essential to find the right mortgage products.
Choose Whole of the Market Mortgage Advisor
Do not solely rely on a few high street banks for your mortgage, but also consider smaller building societies.
A whole of the market advisor / broker can offer suitable mortgage advice and search the entire mortgage market on how much you are likely to be able to borrow on a cheapest possible mortgage deal.
Do not forget to check the mortgage advisor’s fee. Some will charge upfront fee for their services, others may charge on completion or on final offer of mortgage.
Pay your Existing Debts Off
Pay off your existing credit card debts and any personal loans, so that the mortgage lender could offer you the maximum amount towards your annual income and the mortgage advisor could source the cheapest mortgage deal for you.
Keep More Deposit Money Towards Your Mortgage Loan to Value
It is important to understand that the period of 100% mortgage loan to value is talk of the past and this facility is decreasing in current times if not obsolete.
The more deposit or equity you have in your home, the cheaper the mortgage interest rate.
For example, A person who has 10% percent deposit / equity money for new property would have to pay more interest rates than the person who has saved 20% deposit / equity for purchasing a house, so those putting down 20-25% deposit will qualify for a cheaper deal that who has saved 10% of the property value, so it is worth saving the additional sum for the property deposit.
Check Lender Fee for Mortgage Products
Currently, the Bank of England’s base rate is 0.5% from the last two years. Banks borrow money from BOE and put their profit margin in terms of interest and sell mortgage products in the market.
The competitive market of mortgage lenders, mortgage lending regulations and other terms of mortgage lending restrict mortgage lenders to keep a cap on interest rates and they offer competitive mortgage interest rates to customers to keep their products attractive to customers.
Mortgage rates may be at their lowest level, but the mortgage associated lending fee by many lenders has risen sharply.
For those who are willing to borrow large sums, there can be higher lending fees if this entitles you to cheaper mortgage rates on the loans.
Speak to your mortgage advisor to check if a low interest mortgage deal with high lending fee is still the cheapest option to choose. The complexity of mortgage lending and associated mortgage lending competition has made it difficult for customers to choose what is most suited to them.
For those who are looking to remortgage, with relatively small loans, it may be better for a low fee loan.
Talk to Your Mortgage Lender in Remortgaging Case
If you have a little equity in your house and are on an interest only mortgage, check with your mortgage lender about remortgage options, particularly if you are due to come off from a discounted deal or a fixed time mortgage deal. Some lenders offer deals to existing customers that are not generally available to new customers. In some cases, lenders may arrange re-mortgage in case of negative equity.
As it is a difficult time for private tenants as rent payments are at the highest level at all times in all major cities, but on the positive side, house prices are at present going sideways, so first time buyers are not falling behind by delaying purchases.
If property prices remain unchanged or fall further, you could be buying at a lower price.
So the more you save, the better position you would be in for purchasing your dream house.
Improve Your Credit Score
The mortgage lender will take a look at your credit score and past credit records. These records might sometime contain mistakes i.e. CIFAS and GAIN entries and other issues that could be corrected and therefore improve your choices. Discuss your credit score with your mortgage advisor for a better analysis of the situation.
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For further information and /or seek advice on new mortgage applications, Speak to Advance Financial for your mortgage and insurance needs.
By Ruchi Tyagi – CeMAP – An Independent Financial Adviser.
Anything posted on this blog is for discussion purposes only. It should not be considered financial advice. Different people have different needs and what is right for one person may be different for another. If you feel an area discussed may be relevant to you, then please seek advice from us so we can advise you after finding out more about your situation.