Getting a foot on the property ladder sounds disconcerting due to many reasons; not knowing the mortgage market inside out is one of them. Popping into your local bank branch to become familiar with the complicated process from putting in an application to switching from a fixed-interest rate deal to a standard variable rate (SVR) does no longer sound like a wise move. Thanks to the trust people have lost in advice banks give and extremely complicated rules they set for taking out a mortgage. Read further to know more about how to choose a right mortgage broker.
A mortgage is the biggest loan, so, of course, you will be a little unnerved and want to deliberate on it, and the first thing you should think about is whether you should take out a mortgage with a broker or go it alone. Research is crucial regardless of the option you pick for your mortgage. Though you cannot know the stuff completely, what you learn will be enough to do comparison shopping to save money on interest and associated fees.
Take advice from someone you trust and know have taken out a mortgage of late. Their suggestions can help serve as a basis for making a good decision. Many people believe that brokers are bad to consult as they do not collaborate with banks. Only direct lenders charge outrageously high interest rates and charge a brokerage fee which, more often than not, is recurring, making your mortgage exorbitant. This is a myth and should be dispelled.
Why should you choose a broker rather than going it alone?
Here are the reasons why you should choose a broker especially if you are looking to get on the property ladder.
- They have a large panel of lenders
Directly applying from your local bank branch can keep you away from exploring all options. Banks often have limited products and follow stringent criteria. Applying through a broker can help you get the best deal as they have a tie-up with reputed direct lenders and banks. One of the best benefits of choosing a broker is there is no risk of falling prey to unregistered and unregulated online mortgage lenders.
The approval criteria cannot be the same for two people because of a number of factors such as credit score and financial condition. For instance, the self-employed and people with bad credit scores may have to undergo a complicated process, but a broker will introduce you to a lender that matches your requirements.
- The approval rate is likely to be higher
If you decide to go it alone, you will certainly face some challenges throughout the process and there will be unnecessary delays as a result. If your credit score is not up to snuff or your financial condition does not seem to be strong enough to be able to keep up with payments, you are highly likely to be refused. An immediate application to another lender will work against you because recent inquiries may have already pulled your credit points, making you even a riskier borrower.
But a broker can smooth away all those worries. They will assess your application and determine your credit score to know to which lenders you are suitable, and of course, these soft inquiries will not hurt your credit rating. With the help of a broker, you can even easily qualify for bad credit mortgage loans with guaranteed approval.
It is crucial to bear in mind that your mortgage lender will run a hard credit check and go through your finances to determine your repaying capacity, so if your lender suspects, you can be turned down. A broker can help you arrange the best lender matching your credit profile only, but the ball is in the court of a lender then.
- You can shrug off the burden in the early stages
The process of a mortgage can take several days, and technically it starts days and months before you formally put in an application. Comparing interest rates and APRs and finding a suitable repayment term, a lot of things need to be done before you firmly decide to take out a mortgage. Then, you will have to undergo a complicated process of doing all the paperwork. It can drive you around the bend.
The good thing is that you can shrug off all this stress and hectic paperwork by applying for a mortgage through a broker. They will be responsible for collecting and submitting all your documents. You do not need to put your mind to the research work as a broker will help you find the best deal that matches your requirements.
For instance, if you need a mortgage with no deposit for bad credit, they will introduce you to a lender willing to sign off on your application with zero deposit. They will charge you a brokerage fee for the services offered, but it is a one-off cost. They will let you know how much and when you will pay them.
- They can save you a lot of money
Brokers can help save you thousands of pounds in interest payments. Remember that a mortgage is a long-term loan, and interest rates vary by lenders. A broker will help you find the best deal for you that easily fit your budget. They may also guide you on how you can improve your chances of qualifying for better deals. It is always recommended to keep your credit score as high as possible. Arrange a bigger deposit size. When the loan-to-value is low, you will likely get lower interest rates.
The final word
A broker can help you do the paperwork on your behalf, easing your burden. Further, they can help you find the best deal that suits your budget. As they usually have a large panel of lenders and banks, you are more likely to explore various options. Though you will have to pay brokerage fees, it is a one-off cost.
Do research on your own. Before acting upon the advice of a broker, weigh it up. There are various mortgage brokers on the market. You should research them as well.
