How to find the best mortgage advice
The number of people remortgaging their homes rose 30% in June in a scramble for cheap, fixed-rate loans not seen since the beginning of the financial crisis. Remortgaging is increasing as it looks like interest rates are going to rise by the end of the year.
Finding a mortgage is not as simple as picking the deal with the cheapest rate, applying and getting an offer through. There are a whole host of other charges to factor in that may mean you don't pick the loan with the lowest interest rate.
Crucially, there has been a huge shift in the way in which lenders treat mortgage applications following a new set of rules under the Mortgage Market Review (MMR) introduced in April 2014.
Banks and building societies now take a forensic look at an applicant's finances, bringing stricter criteria to the way in which lenders calculate how much you can borrow. Outgoings from the running costs of a home through to food shopping and what is spent on hobbies and childcare are all of great interest to a lender.
An independent mortgage broker can help to identify the best mortgages for your needs and may be able to access deals that you could not otherwise find. They often have exclusive tie ups with lenders to offer deals you can't apply for directly too, so there's far more choice.
Decent brokers know the different lenders and their criteria inside out and can use this knowledge to help with your application.
There are benefits of having a broker who knows their way around the post-MMR market too. They know that, for example, there are some lenders that are more lenient when it comes to childcare costs or school fees being factored in, others with differing approaches to maximum lending ages, interest only mortgages and also those that will be helpful to self-employed borrowers. They can also help self-employed people get a home loan. Further, if you are in a hurry to sort a deal quickly, they will know which lenders can fast track an application, and which are slower at any given time. In some cases it will take two weeks simply to get an appointment with a bank's mortgage adviser, when you could find and arrange a suitable mortgage within the same timeframe with a broker.
Different brokers have different charging structures. Some are free to you, but take commission from lenders; others charge a flat fee of about £500 per mortgage or a percentage of the loan value. Fee-charging brokers may receive commission too.
You can search for one in your area using unbiased.co.uk.
It's worth noting too that Moneywise has now teamed up with one of the country’s top independent mortgage brokers - London & Country - to offer Moneywise readers a mortgage service. Whether you’re a first-time buyer, looking to remortgage or are interested in a buy-to-let mortgage, L&C’s service will help you find the very best rates on the market.
Changing mortgages without moving home. Property owners chiefly remortgage to get a better deal but some do so to release equity in their homes or to finance home improvements, the costs of which are added to the new mortgage. Even though you’re not moving house, you still need to engage solicitors, conveyancing and the new lender will require the property to be surveyed and valued.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.