Some of the lowest rate schemes can carry big arrangement fees, whereas other schemes can carry smaller or no fee or offer help with other costs like valuation fees or provide a cashback. These factors need to be considered to arrive at the best deal so that you focus on the overall cost over the scheme period.
As lenders have toughened their criteria in recent years, it is as much about knowing which lender will do what as it is about the rate and fee package. A first time buyer walking the high street could find that they like the look of a deal only to find further down the line that the lender will not lend for one reason or another.
Even an agreement in principle (AIP) doesn’t guarantee that the lender will lend. They can be useful to reassure an estate agent that you are a buyer able to proceed but getting an AIP from lots of lenders will mean a footprint on your credit file each time.
There are hundreds, if not thousands, of options out there.
So, as well as doing your own research, this is certainly an occasion to search out expert opinion and talk to a mortgage broker. If you choose a good one one, they should be able to explain your options and help you to find the best deal. Go for a broker who offers advice from the whole market.
Avoid brokers who offer a restricted service based on products from a limited number of lenders and mortgage advisers in banks and building societies – they will only tell you about their own products.
Benefits of using a broker who offers advice:
- They can help you look beyond the interest rate and properly compare the overall cost of the mortgage.
- They may have exclusive access to deals including lender-direct deals.
- They will only recommend a mortgage that is suitable and affordable for you. This could also help speed up the process because you’re less likely to waste time on applications.
- A broker may help you do some of the paperwork and speed up the application process.
- If you buy based on a broker’s advice you have more rights if the mortgage turns out to be unsuitable for you.
- They can help if you have a poor credit rating or need a specialist mortgage, such as buy-to-let.
Check your broker’s credentials. Brokers who offer mortgage advice are regulated by the Financial Conduct Authority. All mortgage brokers should be listed on the FCA register – if a broker doesn’t appear there then they are not authorised to provide mortgage advice.
How mortgage brokers charge for their service?
Some mortgage advisers charge a fee and some don’t. Don’t rule out a fee-based service – instead ask the broker what added value they will bring you in return for their fee before making your decision. Brokers who charge a fee may be able to tell you about lender direct deals or have exclusive deals that you won’t find elsewhere on the market. Brokers who don’t charge a fee may still have access to exclusive deals but are less likely to tell you about lender direct deals. Brokers who don’t charge an upfront fee will typically be paid by commission from the lender instead. But, just because they don’t charge a fee, doesn’t mean you won’t get impartial advice.
Remember: You should always ask your broker to explain exactly how they get paid and whether they can tell you about all the mortgages on offer, even those from lenders who don’t pay them commission. If you have seen what you think is a better rate elsewhere, tell them about it. Don’t be afraid to grill your broker!