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Looking for a mortgage

Looking for a Mortgage

Time was, if you wanted a uk mortgage, all you did was walk into your local building society and fill in an application form. Those days are long gone, however. Today you can source a mortgage from so many places, it’s difficult to know where to start

Internet
The most recent innovation is mortgages on the internet. Some lender websites enable you to look at product details only, while other’s allow online applications. More and more lenders are going down this route.

The internet has plenty of information to offer about mortgages and the homebuying process. You can look at individual lenders’ sites for information about the mortgages they offer and explanations of how the different types of product work. However, with these sites you are restricted to looking at only one set of products.

You’ll get a broader picture from one of the personal finance supermarkets. These sites have mortgage finders where you type in your criteria – the size of the loan, whether you want repayment or interest only, a fixed rate or capped rate and so on – and the site will select possible mortgage deals that fit your requirements from the selection it carries. It will usually display the results in order of lowest interest rate first.

Often it’s up to you to then contact the lender (although they may offer online applications too), but these sites can give you a good idea of the kinds of deals available and provide a good starting point.
Mortgage brokers and financial advisers offer their services on the net. Many carry a minimum of information on their website, preferring to take your contact details and set up a consultation.

Direct
Truly direct lenders offer mortgages exclusively over the telephone, although most lenders have, at the very least, a telephone service offering their branch-based products.

Traditionally, direct mortgages were aimed at those who have already been through the homebuying process at least once and are confident about what they want out of their next mortgage. One lender, for example, deals only with those wanting to remortgage their home.

This doesn’t mean first-time buyers shouldn’t arrange their mortgage over the phone, although it helps to read up on the subject before you call. The opening hours for direct lenders tend to be longer than those of high-street branches, so you can phone from the comfort of your own home after work or at the weekend. Some even offer a 24-hour service, so you can phone in the middle of the night if you want to.

The thing about direct lenders is that they have a cost advantage over their high-street rivals. Usually they operate from a single building so they don’t have to run an expensive branch network that covers the country.

The money saved here can be passed on to customers in the form of reduced interest rates on mortgages.

The products available from direct lenders tend to be no-frills homeloans, so they won’t be suitable for everyone. However, a few minutes on the phone to each one will save you having to trudge up and down the high street collecting brochures. If you give a few details of your requirements you may also be able to get a mortgage agreement in principle, either over the phone or sent to you in the post.

Financial advisers and brokers
If your needs are fairly standard then going to an adviser simply means you get him or her to do the legwork for you when it comes to researching the mortgage you want. Most have computer systems which carry a broad range of mortgage deals, some exclusive to advisers. Good mortgage advisers really come into their own if your needs are out of the ordinary.

Brokers and advisers have access to many mortgage deals that aren’t available on the high street, particularly those from providers which will lend to the newly self-employed or those who have a poor credit record. Some lenders only offer their products through advisers, brokers or their own representatives.

Your uk mortgage adviser is required to tell you what kind of service you will receive. For example, those registered as independent financial advisers (IFAs) should look at the entire mortgage market before making a suggestion, whereas a mortgage broker or a tied agent may be offering you a deal from a selected panel of lenders, or perhaps only one in the case of a tied agent. This may be perfectly adequate for the purpose, but you should be told there are other deals available. All advisers should do a basic investigation of your financial needs before giving any advice. There will be a fee for the service, but other fees such as valuation costs may be waived.

High street
The banks and building societies on the high street tend to offer a wide range of general mortgage products, with a small number offering some more specialist loans, such as those for people with past credit problems or who want to invest in more than one property.

Building societies have always offered homeloans while banks have only been able to do so since the late 1980s. Both have had to move with the times to keep up with all the new innovations in the mortgage market. The competition between these lenders has seen them cutting back their profit margins, which is great for customers.

But which is the better lender of the two? Ultimately you are choosing between mortgage deals rather than the type of lender, but both are keen to tell you that it is better than the other. For example, banks say that, as commercial enterprises, they have access to more sources of funding than building societies which rely, to a certain extent, on the money their savers invest. In return, building societies say that banks have to give their profits away to shareholders while building societies can put this money towards offering lower interest rates. Small local lenders are also worth investigating. Many also lend nationally, but preferential rates are often given to locals.

Regulation
The Financial Services Authority (FSA) now regulates mortgages. This means that you will receive clear information about mortgages and mortgage services in a standard format before you apply for a mortgage. An Initial Disclosure Document (IDD) tells you about the adviser, their company, the service they provide and the commission they are paid. A Key Facts Illustration (KFI) gives clear information about the product and its costs. The documents are designed to make it easier for you to shop around by using them to compare products and services from a number of companies.

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