123 Mortgages Mortgage Guide
Getting a mortgage
Going direct
You'll need to do plenty of shopping around to make sure you're getting the best deal available. It's far too time-consuming to visit each bank and building society and you'll only gain a limited, not to mention biased, impression of what they have to offer.
Going online, or picking up the phone, are the best ways to find out what the market has to offer.
Going through an IFA
An IFA is a personal financial specialist who deals with everything from mortgages to pensions and investments. Many specialise in a particular area, so make sure that any IFA you approach has proven expertise in mortgages.
The first meeting with your IFA is usually free, following that there'll be an hourly charge of £30 to £100 (plus VAT). Sometimes you can negotiate that your IFA receives commission from the deal instead. Any commission earned will come from the company whose products they've recommended, and the amount has to be declared.
If you agree to pay commission, your mortgage broker's advice may be influenced by the amount they'll receive from that particular lender. In order to receive truly independent advice, it's advisable to agree a fee upfront instead.
How to check up on an IFA
The Financial Services Authority strongly regulate IFA's and register all who are qualified.
Call their Consumer Helpline on 0845 606 1234 to find out what qualifications your IFA has and what type of advice she / he's allowed to give you.
If you have a complaint about an IFA, contact the FSA on 0845 606 1234
Going through a mortgage broker
There are several types of mortgage broker you can consult â?" it's important to be aware of the differences between them in order to ensure you get the best possible advice.
From 1st June 2005, government regulations stipulated the following classes of mortgage broker;
- Tied Brokers
Employed by one lender, this type of broker can offer only a limited choice of deals.
- Multi-Tied Brokers
While multi-tied brokers can offer a more varied range of mortgages, they're unlikely to offer the best mortgages on the market. This is because they choose to represent the lenders who offer them the best commission, rather than the most consumer-friendly packages.
- Independent Brokers
The flexibility of being able to approach any lender, combined with years of experience in the industry, are the main reasons why independent brokers offer the best deals. They use specialised computer programs to scour the whole market range in order to find a mortgage which suits your needs not theirs.
The Financial Services Authority has banned mortgage brokers from 'cold calling' people at home, so never respond to unsolicited calls offering mortgage advice. And always make sure that your mortgage broker is CEMAP, or MAQ qualified.
Contact the Financial Services Authority on 0845 606 1234 if you're unsure about your broker's credentials.
What do mortgage brokers charge?
The first meeting with your mortgage broker is usually free, following that, an hourly charge of £50 to £150 (plus VAT) is typical. Sometimes you can negotiate that your broker receives commission from the deal instead.
Always ensure that your mortgage broker explains their charges on your first meeting you should receive an Initial Disclosure Document explaining their policy.
When your broker recommends a mortgage, they must also outline their reasons for choosing that deal in a Key Facts Illustration document. The document will also include details about the broker's fee and any commission.
Should I pay fees or commission?
Paying your mortgage broker an agreed fee is advisable. If you agree to pay commission, your mortgage broker's advice may be influenced by the amount they'll receive from that particular lender.
Whichever option you take, always check the mortgage you're offered against the latest Best Buy tables you can access these tables from the Financial Service Authority's website.
How to check up on a mortgage broker
The Financial Services Authority regulates the mortgage industry authorised mortgage brokers are listed on their register. To check whether your mortgage advisor is registered, simply type in the name of their firm, or reference number, at http://www.fsa.gov.uk/register/
It's essential that your mortgage broker is registered. If you act on advice given by an unauthorised firm or individual, you won't have access to compensation from the Financial Ombudsman service if the information proves incorrect.
If you have a complaint about a registered mortgage broker, you should first attempt to resolve the matter with the firm. If that fails, contact the Financial Ombudsman Service at:
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London E14 9SR
Tel 0845 080 1800
www.financial-ombudsman.org.uk
Going through an estate agent
Estate agents will often try to sell you a mortgage, alongside the house you've just purchased. However, it's doubtful that they'll give you a good deal.
Frequently, estate agents will claim to be independent mortgage advisors, when they're actually in partnership with just one lender. Your estate agent gains commission from the deal, but you're unlikely to profit.
Ask your estate agent who they deal with if they name just one or two companies, it's improbable they'll offer you a competitive deal. Don't allow a pushy sales pitch to sway your decision - if your estate agent suggests you may lose the sale if you don't buy the mortgage plan offered, a quick call to your seller will remedy the problem.
Always make sure that anyone selling mortgages is CEMAP qualified. For further details, contact the Financial Services Authority on 0845 606 1234.
Mortgage Basics - basics regarding interest rate, exit penalities, proving income
Property valuation & survey fees - property valuations and expenses incurred buying a home
Getting a Mortgage - different ways you can go about arranging a mortgage
Mortgage Types - explanation of the different types of mortgage available
Mortgages for people with bad credit - info for people who have credit problems
Bad Credit Mortgage - more info on mortgages for bad credit
Remortgaging - information on switching your mortgage to another provider
Mortgage Calculator - basic mortgage repayment calculator
Useful contact information - useful contact information relating to mortgages
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE.