Residential mortgages are regulated products in the UK, and mortgage advice is a regulated service. This means you cannot apply for a residential mortgage or re-mortgage without receiving advice from a qualified person on your mortgage options.
There are two ways to obtain this advice, direct from a mortgage lender, or through a mortgage broker.
If you apply direct to lender the mortgage adviser working for the lender can advise you only on mortgage products available from that lender. This is known as a ‘direct to lender’ mortgage application. This may work for you if the lender you choose has a suitable product for you, and will accept you as a borrower, but can be a frustrating waste of time if this is not the case.
The best solution is to get mortgage advice from a mortgage broker. It is important however to understand the difference in how mortgage brokers trade so that you can establish the best source of mortgage advice for you.
The term ‘independent mortgage broker’ is now restricted in its use. To be considered an independent mortgage broker the firm must provide advice on mortgage products from the whole of the market, advising on mortgages, re-mortgages, and second charge lending (secured loans).
more about second charge lending here
A number of mortgage brokers operate within estate agents offices and these brokers are commonly managed through a national company that works with a limited panel of lenders, this means they are not independent mortgage brokers.
Clearly, you as a borrower, wish to find the best mortgage deal available to you with the most competitive rates. Not selecting an independent mortgage broker to advise you means you are not considering the whole of the UK mortgage market.
How to apply for a mortgage
The majority of mortgage advisers in the UK, both those working for lenders direct, and those with large or small brokerages will work face-to-face.
This means that your mortgage advice will be provided in a series of prearranged meetings which you are required to attend to discuss your mortgage requirements and your options.
A typical pattern when dealing with a face-to-face mortgage broker is a two meeting process where the initial meeting is focused on gathering information about your circumstances, and the second meeting is focused on presenting your options and putting together your application.
Clearly, this can be very time-consuming for you as the client, with meetings taking 1 to 2 hours each time. The additional complication is that at busy times you may find you have to wait several days, or even a week, to book your initial appointment with your mortgage adviser, perhaps not the best option. The wait for mortgage advice is a particular problem for those going direct to lender.
Why we are different
Here at A Mortgage Now our aim is to make the whole experience, swifter, easier, and more pleasant for the client.
We use the power of online-application to give you top quality mortgage deals and advice
- Without meetings
- Without paperwork
- Without fuss
Our system means that the whole of our mortgage advice process can be dealt with through two or three focused 10 or 15 minute phone calls and all necessary information exchanged quickly and securely via our online systems.
We are of course here to assist you by providing you with mortgage advice to suit your individual needs and some clients, for example, first time buyers, may spend more time discussing their situation and clarifying detail than others – that is no problem for our team.
Online Application – how it works
In order to apply you simply contact our team by:
Our website means we are open 24 hours, seven days a week, 365 days a year. This means you can start your mortgage advice process at any time to suit you.
How the independent advice process works
A key part of our process is our ability to provide online application driven by our mortgage offer in principle form. A mortgage offer in principle form allows you to provide the information we require to accurately establish your options and apply for your mortgage online.
Some clients complete our mortgage offer in principle form as a start point. We can then speak to you by telephone to clarify detail and get a little extra background. This puts us in the position to advise you of your mortgage options.
Important – we do not run any credit scoring with any mortgage lenders until we have first:
- Established that your application is likely to be accepted by a lender
- Advised you of the mortgage lenders terms and confirmed you are comfortable with them
- Obtained your permission to run credit score
Many clients who are less sure of their options and requirements prefer to telephone or email us first. In these circumstances one of our experienced team will have an initial discussion with you to narrow down what you need, and what your options are before moving on to the mortgage offer in principle form.
The first step once we have selected your recommended mortgage lender and product is to obtain a mortgage offer in principle – sometimes called a mortgage decision in principle (dip) or application in principle (aip).
In order to obtain your offer in principle we need to see background details to support your mortgage application. These will typically include:
- Credit File
- Proof of residency
- Proof of income
- Bank statements
- Proof of deposit (where appropriate)
We run a secure online upload system that enables you to scan your documentation and upload it safely and securely to our team.
Once we have confirmed your mortgage offer in principle for you, we are ready to move to full application.
We the handle whole of the mortgage application process on your behalf, checking the documentation provided and certifying it before providing it to the mortgage lender.
Throughout the application process we keep you dated by email, telephone, and sms text.
More about the mortgage application process
Common issues with mortgage applications
Mortgage lenders consider each application thoroughly as they are charged by the regulator not to lend where it is not appropriate.
Here are some of the key issues that may arrive during your application and how to avoid them.
Electoral register – make sure you are listed on the electoral register by contacting your local authority
Exceeding your overdraft limit – ensure you do not exceed your overdraft limit at your bank in the months leading up to your mortgage application.
Payday loans – avoid taking payday loans at any time
Identification – ensure your identification documentation (passports/driving licences) are current and the data correct.
Declare everything – for example, some borrowers may fail to mention a credit card balance where they clear it every month. Do not make you own decision on what information is relevant to your mortgage application – leave it to your mortgage broker.
Make sure your deposit is traceable – do not put your deposit funds into the savings accounts of friends to look after for you.
Credit file – pay all your credit in full and on time for maximum range of lending options when you apply for your mortgage.
Affordability calculators – the majority of Lenders provide an online mortgage affordability calculator online and borrowers frequently refer to them to try to establish their borrowing potential. You should be aware however, that each calculator is build in a different way and requires calculation information submitted differently. Therefore if you are not experienced with a particular calculator your calculated results are likely to be incorrect.
What is the best mortgage for you?
The primary factors with all lending are, can you obtain the lending, and which is most cost-effective way to do so?
We help you establish which lenders would be prepared to consider your application, but how do we establish the mortgage product most suitable for you?
Mortgage products come in three primary forms:
- variable rates – that are set and adjusted by the lender
- tracker rates – that follow an international rate such as Bank of England Base Rate
- fixed rates – there were guaranteed to be fixed for a period of time
each rate has its own particular benefits and disadvantages and these are covered in more detail on our ‘which product’ pages
The best mortgage for you can only be decided once we understand your view on lending and your primary objectives. For example, is it important to you to know that your payment will not increase? If so, a fixed rate may be appropriate.
Can you afford higher payments, but prefer to make savings immediately while you can? A tracker rate may be right for you.
Do you need flexibility, and need to be able to repay some or all of your mortgage without penalty? This may suggest a variable rate.
How do we establish the most cost-effective mortgage option for you?
The primary cost of any mortgage is the interest payable, and therefore interest rate is naturally key to correct product selection. But beyond this mortgage products carry a number of additional costs and fees.
- Valuation fees – the cost of assessing the security property
- Booking fees – common with fixed rates to hold the rate for you
- Application/Administration Fees – charged by lenders to help cover the cost of application
- Product fees – charged against product to help maintain the lender’s profit margin
We will usually assess the total cost of your mortgage through the product period with the inclusion of the cost of all mortgage fees. This enables us to accurately compare one mortgage product to another. For example a mortgage lender will typically offer one fixed rate with no or low product fees, and another higher rate with a higher product fee. In this case borrowers with a higher lending requirement may benefit from taking the product with the lower interest rate and higher fee.
Selecting your mortgage product is sometimes not as straightforward as making mathematical calculations. Often there is an overriding requirement which becomes a priority, for example the need to avoid early repayment charges due to an intention to repay the mortgage short-term.
Sometimes, there may be a choice of mortgage products that will do the job successfully for you. Fortunately mortgage illustrations are set out in the same fashion by all lenders and this allows you to accurately compare mortgages.
Making mortgages simple
We like our clients to understand the mortgage product being recommended and how it meets their needs. In order to do this we try to keep our communication simple, avoiding technical terms (although some are inevitably always necessary), and setting out the key information in a clear and concise way.
If there is ever anything you do not understand or are unclear about with regard to your mortgage application please feel free to ask your independent mortgage broker.
Dealing with bad financial situations
Have you got a history of missed payments on credit – defaults, County Court judgements, IVA’s, bankruptcy? If so, many mortgage lenders, including most of the High Street names are likely to reject a mortgage application from you.
This does not however mean that you will not be able to obtain mortgage lending. There are specialist lenders that are seeking applicants with a chequered credit history and they may be able to assist. Such lenders distribute their products through mortgage brokers, and therefore an independent mortgage broker is your best source of advice if you have a bad financial situation.
What is important?
Clients with a bad financial history are likely to find lenders more favourable if the problems occurred 24 or 36 months ago. In these circumstances there are specialist mortgage lenders that will ignore registered defaults or County Court judgements. Where problems are more recent it can be trickier to place the case – important factors are the timing and size of any default or CCJ.
It is very important when dealing with clients with bad credit history that your mortgage broker take steps to fully understand that credit history and your situation before any application is made to any lender. Our team will study your credit files, and your bank statements to make sure we have highlighted any items that may prove an issue for a potential mortgage lender. We do this before running any credit scores.
Unfortunately, it is still common in the market for some mortgage brokers to run credit score is blind (without even checking your credit file). We regularly see this, with a broker running a score with a lender such as Halifax to ‘see what happens’. This is amateurish and against regulatory rules. If you have poor credit and a mortgage broker is taking your case to a lender without checking your credit file the alarm bells should be ringing.
Reducing mortgage interest charges
Three primary factors control the amount of interest you will pay on your mortgage:
- your mortgage rate
- the amount you are borrowing
- the length of time you require the money
therefore, as well as ensuring you have the best mortgage rate possible it is important to maximise your deposit (higher deposit equals lower mortgage rate), and to pay off your lending as soon as possible.
We are able to assist you to find the best mortgage rates, and also advise you on how pushing your deposit levels can reduce your mortgage costs.
It is important to set your mortgage term to keep the costs within your budget. Most mortgage lenders allow you to overpay a significant amount on your mortgage without penalty and this reduces the actual time over which you repay your mortgage and therefore your total mortgage interest charges.
If you intend to overpay lump sums you should discuss this with your independent mortgage broker in the first instance so that suitable mortgage deals can be identified for you.