Residential
Residential Mortgages
A mortgage is an agreement between you and a bank whereby you borrow money from the bank to buy a property. You agree to repay the loan over a period of time (typically 5 years to 40 years). If you fail to maintain your contractual monthly payments, the bank will take possession of the property and sell it to recoup their loan. Residential mortgages are for properties that will become your permanent residential home in the UK.
In general, residential mortgages are available to UK nationals permanently residing and working in the UK, EEC nationals living and working in the UK, and foreign nationals (non EEC nationals) who are currently residing in the UK (albeit on some sort of work visa).
If you want to buy a property in the UK and you need a mortgage, then you’ve come to the right place. There are two ways to obtain a mortgage: approach a lender directly or use an independent whole of market mortgage broker.
Going Direct
You can apply directly to any of the UK high street banks. You’re probably banking with one of them and it makes perfect sense that your bank is your first port of call to inquire about a mortgage. However, your bank can only advise you on their own mortgage products; as a result, you will never know if you can secure a better mortgage deal from another lender. If you have the time, you can approach alternative banks and carry out a cost benefit analysis on your mortgage options.
Mortgageintellectual.com provides a mortgage comparison best buy table, and if you have the time to shop around, you can approach these lenders directly. But please note: It’s not just about the best rate; it’s also the lender’s criteria, affordability, and your specific mortgage needs that have to be considered when applying for a mortgage. Alternatively, you can outsource the entire mortgage search process to an independent mortgage broker.
Independent whole of market mortgage broker
Seek mortgage advice from an independent mortgage broker
An independent mortgage broker has access to the whole mortgage market and can arrange and secure mortgage products from all lenders apart from a few direct only lenders like HSBC, First Direct, Tesco Bank, Yorkshire Building Society, and Britannia. Since writing, HSBC has changed its business model and commenced offering their products to the intermediary market via Countrywide mortgage brokers.
Apart from these direct only lenders, they are able to offer mortgage products that are representative of the entire mortgage market. Likewise, there are lenders that only sell their products through mortgage brokers; as a result, you’ll have access to more mortgage products via a mortgage broker than by going direct to one bank. The regulator introduced new rules (Mortgage Market Review (MMR)) in April 2014. The outcome of MMR is that mortgage lenders have to apply stringent underwriting and stress testing on all mortgage applications going forward. It goes without saying that you need to have the best and sharpest mortgage minds dealing with your mortgage application.
Having a broker source the right product for you is a prerequisite, but most importantly, the real added value of using a mortgage broker is having someone to take control and project manage the entire application process. If you don’t want the hassle of running around and dealing with banks or possibly being rejected by a lender for having too many takeaways, and you want someone to arrange the best mortgage and manage the entire mortgage application, deal with the bank, estate agents, and solicitors from start to key collection, in an efficient and reasonable time frame, then this is what a good mortgage broker provides. And it goes without saying that they will charge a fee for this service. Typically, the fees vary from £500 to 1% of the loan amount depending on the complexity of each case.
It’s a simple choice: DIY or Outsource?
Shopping around
Shopping around is checking individual lender rates and criteria and proceeding with the best lender that ticks all your boxes. Do not make multiple applications to lenders, as numerous credit checks and searches on your credit file could affect your credit score. You should work on a maximum one hit policy, i.e., obtain an agreement in principle from one lender only. An agreement in principle is when the lender conducts a credit check and tentatively agrees to give you a mortgage.
Once you have an agreement in principle (also known as a decision in principle), there is no harm in speaking to a broker to see if they can improve on your existing mortgage product. All brokers are bound by TCF (treating customers fairly) and they have access to systems that can quickly compare best products across lenders in a matter of minutes. If you have managed to source a good deal, they will tell you and if they can offer you something better, inclusive of all fees being factored in, they will let you know accordingly.
A quality broker knows that they cannot get every deal that comes their way, but they are confident that other opportunities will arrive where they can be of service. As they say, “you win some, you lose some.”
When you should definitely use a broker
If it’s not a straightforward standard mortgage inquiry, then you are better off speaking to a mortgage broker. Complex, specialist areas are best dealt with by an experienced mortgage broker. Whilst everyone’s case maybe unique, in practice there are numerous people with similar life events and it’s highly likely that an experienced broker would have arranged a mortgage for someone with similar circumstances. They will have direct access to underwriters at respective banks who can make a final decision as opposed to a computer system that has been programmed to only lend to Mr. and Mrs. Squeaky Clean 9 to 5.
If you have gone to a high street bank and been declined for a mortgage or the amount being offered is way below what you require, then your next stop should be an experienced independent mortgage broker.
Our carefully selected panel of experienced mortgage brokers from the top UK mortgage firms are able to source and access a wide choice of mortgage products from high street lenders and niche banks. They will be able to advise you on the best mortgage that meets your criteria and financial circumstances. A mortgage firm cannot claim to have strength, depth, and serviceability in handling every single type of mortgage enquiry, but we have combined the services of a number of mortgage firms. As such, there is strength in numbers.
Whether you choose to go direct or use a mortgage broker: Good luck with your mortgage application!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE