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Investment Property Loans and Mortgages
The best way to source the right mortgage for you is to use a mortgage
broker. Of course, I would say that - I am a mortgage broker! But it really
is excellent advice. Let me explain why, and how you can pick the right
mortgage broker for you…
1. Get the know-how. Most people looking for a mortgage follow the same
basic steps. They look at the best-buy mortgages in the national Sunday
press. They approach these lenders. They also talk to their existing bank or
mortgage lender (often one and the same). They then proceed on this basis.
Best-buy mortgage charts are often misleading though. They are usually based
on the lowest, initial mortgage rate. It is far better to assess the overall
package on offer. The 'cheapest' mortgage may only be the least-expensive
for six months. It may also have higher arrangement fees, a
higher-than-usual rate after the initial six-month period, and substantial
redemption penalties. Many of these lenders will also 'cherry-pick', turning
down borrowers with less-than-perfect credentials and/or properties that are
out-of-the-ordinary. That rejection may impact on any subsequent application
elsewhere. The biggest problem is that most people will only look at three
or four offers; but there are 1000's on offer to you via independent
mortgage brokers!
2. Understand the best reasons for using a broker. Quite simply, a mortgage
broker will have a panel of 100's of lenders and 1,000's of mortgages in
front of them. They can take your precise details and match them to the
right lender and product. Some very good deals are only available through
brokers. Lenders nowadays tailor certain mortgage products specifically for
the broker market. You would not get these if you walked into the high
street branches. For example, you could walk into Abbey and find out about
six different deals. If that client had gone to an independent broker and
asked to see what Abbey deals were available, there would be 10 different
deals! You should not just look at what the high street names have to offer.
There are other excellent lenders who do not have a shopfront in the local
town who can deal much better with varied circumstances. Brokers handle all
the research and hassle too. Their fees are paid by lenders. Even if you
went direct, you'd not get these fees!
3. Recognise the difference between different mortgage advisors in the
marketplace. Clearly, if you walk into Barclays or Abbey and ask for
mortgage information, you'll receive details of Barclays or Abbey products
only. The advice is limited only to what's on offer there; not necessarily
the best products on the market nor the right ones for you. Other mortgage
brokers, often sourced via estate agents typically, work for or represent
only a small number of mortgage lenders (usually those from within the same
financial group). They too can only give limited information and advice. Do
be aware of this when the estate agent suggests putting you in touch with
their broker. Brokers should ideally be independent. This means that they do
not work for or represent any mortgage lenders. This will increase your
chances of impartiality when dealing with them. All brokers legally have to
disclose their status at the start of a meeting. So your first question
should focus on whether they are independent or not.
4. Check that the broker is registered with the relevant professional
bodies. All brokers need to have passed certain stringent examinations to be
giving advice in this industry. These examinations are known as the CeMap
(Certificate of Mortgage Advice and Practice) or the MAQ (Mortgage Advisors
Qualification). Do please ensure that the mortgage advisor has attained
these qualifications. Also, the advisor will need to prove that he has a
consumer credit licence and is registered with the MCCB (Mortgage Code
Compliance Board). If you are meeting a broker at their office, it is a
legal requirement that these documents are displayed openly within the
office. Look for them and read them carefully. If you meet elsewhere, ask
for verification. Also, at the start of a meeting, you should receive
certain documentation confirming this; a 'Terms of Business Letter'
detailing these points and letting you know how the broker is paid. The law
is quite clear that all of these points should be disclosed upfront to a
client. Make sure they are.
5. Compare the deals on offer. What you need to do is to be totally honest
with your broker if you want to get the right deal for you. This means
revealing negative information as well as good! For example, a county court
judgement (ccj) should be revealed. Some lenders will not provide funds if
you have one, others will do. The broker will be wasting everyone's time
approaching if they approach that first group in ignorance. It is sensible
to look at the various products that the broker is recommending, comparing
the overall package for each. Ask the broker why these are being suggested.
Look too at what the broker is being paid in commission on each product. If
the one that is being recommended most carries the most commission, question
the broker closely about the reasons for recommendation. Always get what you
have agreed in writing. There are very good quoting systems that are
available and the broker will be able to give you quotes relating
specifically to you and your mortgage.
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