What To Ask A Mortgage Broker?
Taking out a mortgage is a huge responsibility that you will be liable for, for many years to come, therefore, it is incredibly important to choose an option that will suit you and, more importantly, an option that you will be able to afford.
Unfortunately, while the internet is a powerful tool, you won’t always be able to figure out which mortgage option will be best for you with a few Google searches.
This is where mortgage brokers come into the equation; however, before you meet with a mortgage broker, you should draw up a list of questions to ask them that pertain to your specific situation so that they can provide you with the best mortgage advice possible.
If you’re looking for mortgage advice, then there is no better place to start than Loan corp, as we have expert knowledge that can help get you into your new property without any headaches.
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Are You A Regulated Broker?
While this might seem like an obvious and unnecessary question to ask your mortgage broker, it is actually incredibly important and one of the first things you should be asking.
The reason for this is due to the fact that mortgage advisers in the UK are required to either be regulated by the Financial Conduct Authority (FCA) or be an agent from a regulated firm.
You will be able to see if a mortgage adviser is regulated by searching the FCA register. If you cannot find your mortgage broker on this register, then it would probably be best to look elsewhere.
If something goes wrong with your mortgage application, then having an unregulated mortgage broker could cause you to be liable for any issues that arise.
What Are Your Rates, And How Do You Charge For Your Services?
Finding out how a mortgage broker is going to charge you and what their rates are is another extremely important part of the mortgage process, as you will need to know whether you will be able to afford their services or not.
Some mortgage brokers will charge the borrower a flat fee that will either be paid upfront or after the sale has gone through and your mortgage application has been approved.
If you think there is a possibility that your application could be denied, then you should avoid paying the fee upfront and instead ask to pay it once the process has been completed, as you may not be refunded if the deal falls through.
Other mortgage brokers will not charge you a fee, as they work on a commission basis and will receive a commission from your chosen lender. However, there are some mortgage brokers who work on commission and will also charge you a flat fee.
It is important to keep these factors in mind, especially if you do not have all that much capital to work with.
How Much Can I Borrow?
When you are consulting with a mortgage broker, they will likely take a look at your credit history and will want to know how much you earn, as well as what your other financial commitments are, before they start the mortgage application process with you.
Knowing how much you can borrow is very important, as it will help you find a property that you will be able to afford; otherwise, you may get your hopes up only to realise you won’t be able to afford the monthly mortgage payments on your dream home.
If you aren’t able to borrow as much as you would have liked to, then you should consider saving your money and waiting until you can afford to put down a larger deposit. However, a good broker will be able to give you a list of options to choose from if you are faced with this situation.
How Much Deposit Should I Put Down?
The general rule of thumb when putting a deposit down on a property is to put as large of a deposit as you can afford down, as this will give you access to a wider variety of mortgage products while also lowering the cost of your monthly payments and interest.
Most mortgage brokers will recommend that you place a 10 to 15% deposit down on a property; however, some mortgage lenders will accept a 5% deposit, although, as we have mentioned above, this means that your monthly payments and interest will likely cost you a bit more.
How Many Lenders Do You Work With?
If you are trying to get the best mortgage deal possible, then it would be a good idea to ask your mortgage broker how many lenders they work with.
The reason you should ask your mortgage broker this question is due to the fact that not all mortgage brokers have access to the whole market of lenders, and you should be aware of this as it is possible that the lender/s your mortgage broker works with won’t be able to provide you with the best mortgage product for your situation.
There are three types of brokers that you’ll be able to choose from, depending on your preference, and they are:
- Whole market brokers who have access to the widest range of mortgage products.
- Brokers that work for one specific lender.
- Brokers who have a limited list of lenders that they work with.
While using a specialist broker that only deals with either only one lender or a few specific lenders can seem tempting, as they will have extensive knowledge of those lenders, if you want the best mortgage deal possible, then you should choose a whole market broker.
Which Type Of Mortgage Will Be Best For Me?
When you are choosing a mortgage product, you will have to decide how you want to repay your loan, as there are many different options on the mortgage market to choose from.
Repayment mortgages are the most common type, as the borrower pays instalments that cover the cost of the initial loan, as well as the interest that is accrued until their term ends. Once the term is up, the borrower will then own the property.
Interest-only mortgages, on the other hand, only require the borrower to pay for the interest accrued on the loan on a monthly basis; however, at the end of their term, they will still owe all of the borrowed capital and will not own the property.
While the options mentioned above are the most common mortgage products, certain lenders offer their own specialised products, such as flexible mortgages and offset mortgages, so it would be a good idea to consult with your mortgage broker, so you can find a product that suits you and your situation best.
What Is The Current Interest Rate, And What Are The Future Predictions For It?
It is always important to find out what the current interest rate is and what interest rates you will be offered by different mortgage lenders, so you can ensure that you get the best deal.
Most lenders offer a cheaper interest rate to borrowers in the first few years of their mortgage deals; however, once these years have passed, the borrower will be subject to pay for interest at a rate specified by the lender.
It is important to keep this in mind when considering mortgage products, as you will need to know if you will be able to afford the interest that will begin to accrue once the cheaper interest rate offered by your lender has expired.
You should always get your broker to check the fine print of your mortgage contract, as some lenders may allow you to continue with your cheaper interest rate for longer, while others will force you to revert to their Standard Variable Rate (SVR).
What Other Fees Will I Need To Pay To The Mortgage Lender?
While you might be able to afford a deposit on your dream home, there are various other costs associated with securing a mortgage contract.
You should ask your mortgage adviser about which of these costs will apply to you, depending on the lender you choose to borrow from, as you may not be able to afford all of the extra fees, and you may need to lower your deposit.
Another important question to ask your mortgage adviser about many of these fees is whether they will be returned to you if your deal falls through, as many mortgage applications are declined, so it will be good to know whether you will be getting your money back or not.
What Documents Will I Need, And How Long Will The Process Take?
When you go to meet with your mortgage adviser, you should first ask them what documents you will need to bring with you in order for you to complete the mortgage application process.
You will usually need to bring things like a few months’ proofs of your monthly income, some utility bills, identification documents, and some other important documents, but your broker should be able to give you specifics.
If your application is straightforward, then the process likely won’t take all that long; however, if you work on a contract basis or there are other aspects of your mortgage application that may make the process more complicated, then it could take a lot longer to be approved or declined.
Can My Mortgage Transfer To A Different Property?
If there is a possibility that you could want to move before the end of your mortgage term, then it would be a good idea to ask your mortgage broker to only provide you with mortgage products that are transferable.
Many lenders offer this option these days, but it will be important to make sure that your chosen lender also offers this option if you do plan on moving before your mortgage term is up.
FAQS
What is a mortgage broker?
A mortgage broker or a mortgage adviser acts as the middleman between borrowers and lenders in order to help negotiate deals that will be beneficial to both parties.
What questions will a mortgage broker ask me?
A mortgage broker will normally ask you information pertaining to your financial background, such as questions to figure out your credit history, monthly income, and so on.
Is it easier to go through a broker?
Yes, it is significantly easier to go through a broker, and you will often end up spending more money on your monthly repayments if you don’t, as brokers often have access to better rates from lenders.
Final Thoughts
If you are in need of mortgage advice from a broker, then there is no better place to look than Loan corp. We can offer expert advice that can make the mortgage process so much easier for you.
Contact us now as we are expert mortgage brokers who can answer all your questions.