Ex Pats – Is it worth using a mortgage broker?Sunniva Group
The mortgage market is laden with offers – with ultra-low fixed rates and more attractive deals for buyers with small deposits driving a rise in new borrowing and remortgaging.
Last week, Yorkshire Building Society alone reported a 70 per cent leap in remortgaging on the previous summer as borrowers acted ahead of a rumoured rise in interest rates.
Rachel Springall at comparison website Moneyfacts says: ‘Rates have been at record lows this year, but since murmurings of a base rate rise, it is expected the lowest rate deals won’t be around forever.’
Deals: The mortgage market is laden with offers – with ultra-low fixed rates and more attractive deals for buyers with small deposits driving a rise in new borrowing and remortgaging
The vast range of deals on the market has burst through the 15,000 barrier for the first time since 2008 when the credit crunch hit, according to the Mortgage Advice Bureau.
But this huge choice makes the market a minefield – and borrowers may need help to avoid expensive mistakes.
Experts say it is not just first-time buyers, but also home-movers and remortgage customers who face a serious challenge finding the right deal.
Pick well and you can set your payments at a record low for anything from two to ten years.
Pick badly and not only will your monthly payments be higher, but you may have to pay thousands of pounds in fees that you could have avoided.
Ian Gibbons of Nottingham Mortgage Services, the broking arm of Nottingham Building Society, which offers products from several providers, says: ‘The market is becoming increasingly crowded and confusing, especially if you are trying to find your way through it on your own.’
Look for a five-year fixed-rate deal, for example, and Moneyfacts comes up with hundreds of combinations of interest rates and fees to choose from.
Fees: Some brokers charge upfront fees for their service, just like accountants or lawyers
The simplest strategy for negotiating this minefield is to get help using a mortgage broker.
Some brokers charge upfront fees for their service, just like accountants or lawyers.
Others are fee-free because almost all brokers are paid commission from lenders when a deal goes through.
When you approach a broker, ask how many lenders they will look at before they recommend one – some will consider almost every bank and building society in the country while others work from a smaller panel of lenders.
USING A MORTGAGE BROKER GOT MY A BIGGER BETTER HOME
Getting it right: First-time buyer Julie Barton
Turning to an independent broker did not just help first-time buyer Julie Barton get a good mortgage – it got her a bigger and better home.
‘Like many people, I know next to nothing on mortgages so I knew I needed help,’ says support worker Julie, 45.
She checked online reviews on VouchedFor – a website that helps people find an adviser – and signed up to a free consultation with a local firm, Acclaimed Mortgage Consultancy in Birmingham.
She says: ‘At the first meeting I said I was thinking of buying a small flat nearby.
‘But, after looking at my situation, my adviser worked out that I could borrow more than I thought and at a lower interest rate, so I could afford a house with a garden.’
Not only did Julie’s broker, Sandy Ameer-Beg, alert her to the high service charge on the flats she was looking at, but Julie says she also pushed through the purchase when problems arose in the chain.
‘Without her support I would not have known whether the delays were normal or if I had reason to be worried – and I certainly would not have known whom to call to sort it out,’ says Julie.
After talking through all her options Julie picked a five-year fix with Skipton Building Society, set at 3.99 per cent – a rate she says she would never have found on her own.
She moved into her two-bedroom, semi-detached house in Moseley in August and is already thinking of making some changes, adding value in a way she could not have done in a flat.
‘Seeing an expert changed everything. I could relax knowing someone else was doing the leg work for me,’ she says. Using a broker cost £395, but Julie says: ‘Every penny I paid in fees was money well spent.’
How to get a mortgage broker to help you
Here are four ways a good, independent expert can help you:
1. They start by narrowing down the type of deal to one that suits you best.
This autumn, many borrowers are tempted by super-low, two-year fixed-rates being heavily promoted in bank and building society adverts.
But brokers say slightly higher rate five-year fixes may offer better, long-term value.
‘We look at a customer’s individual circumstances – including how long they think they will stay in the property – before recommending a certain type of deal,’ says Sandy Ameer-Beg of Midlands-based broker Acclaimed Mortgage Consultancy.
‘One client may be ideally suited to a long-term fix, while another, whose situation seems similar on the surface, may be better off with a base rate tracker.’
2. Having identified the best type of mortgage, brokers can find the best overall deal.
‘With application fees varying from zero to more than £1,400, this means more than just looking for a low interest rate,’ says David Hollingworth of broker London & Country Mortgages, which is based in Bath. ‘We can add up the total cost of a deal to find the most suitable.’
In most cases, people borrowing less than £100,000 are better off on deals with no or low application fees, even if the interest rate is a little higher.
Get a mortgage of more than £100,000 and your total repayments will probably be less on a low rate alternative, even if the application fees top £1,000.
A good broker can help do the maths, which would otherwise challenge the most numerate mortgage hunter.
3. If there is anything more complex about your situation, for example if you have recently become self-employed or are seeking a mortgage for an unusual property, then a broker should know which specialist lenders to approach and how to present your application.
They should also know which banks and building societies are processing applications on time – and which are experiencing backlogs. So if you are under pressure to get your loan through by a deadline then they can stop you applying to a laggard.
And brokers will act on your behalf, fighting your corner if something goes wrong between application and completion.
4. Brokers can also help find the best buildings or contents insurance.
You do not have to take a policy from your mortgage provider and can cut your bills by as much as a third if you shop around.
A broker may also talk clients through subjects such as life insurance to ensure a mortgage is repaid and families are protected from eviction if the breadwinnner dies unexpectedly.
Research shows that a lot of borrowers risk their family’s future by skimping on life cover.