Erin Ryan asked:


Finding independent mortgage advice is not as hard as it sounds. It is very important though if you want to make the right decision about which mortgage is the best one for you.

There are plenty of information about mortgages in the public domain on websites, in magazines and tabulated over and over again in mortgage comparison tables. We believe that because there are so many variables within the minefield that is mortgages, that seeking mortgage advice is essential. In fact, we even recommend you speak to independent mortgage advisors or brokers who have access to the whole UK mortgages market because otherwise you might not get advice covering all mortgages available to you.

This is even more important if you are trying to get onto the first rung of the property ladder and are a first time buyer. With the property market being so tough in the UK, there are more and more first time buyer mortgages on the market now and good mortgage advice for your first home is essential.

Since 2004 the giving of personal financial and mortgage advice in the UK has been governed by the Financial Services Authority. Companies or individuals offering personal financial or mortgage advice must comply with the Financial Services Act or they are breaking the law. Many companies offer consultations on an ‘information only’ basis and you would need to formally agree to having requested to be advised on financial matters. Adherence to the rules of the Financial Services Act is called ‘compliance’.

Mortgage advice can be sought from a number of sources:

• A tied mortgage adviser: These work – and will therefore recommend products – on behalf of just one lender.

• A multi-tied adviser: These will recommend products from a limited range of lenders.

• An Independent Financial Adviser (IFA) or Independent Mortgage Advisor: These will recommend products from the whole market.

You are perfectly entitled to ask on what basis your advisor is operating.

Be warned though, that if you go to see an Independent Mortgage Advisor, they will be independent on mortgages but perhaps not insurance – and most homebuyers take buildings insurance alongside their mortgage.

By researching and reading it is relatively easy to glean a certain amount of useful information but by seeking personal mortgage advice from a mortgage advisor, you will be gaining the expertise of someone who knows all about all the different first time buyer mortgages on the market, what special deals are on offer, the peculiarities of the one lender versus another, what the latest mortgage releases are and of course they will always take your personal plans and circumstances into consideration.

As well as verifying who you are, you will be required to provide evidence of major income (your salary) and your major out-goings like car-loans, student loans etc. If you have loans or debts, it does not mean that you cannot apply for a mortgage.

Mortgage advice can be given in a number of different ways. It can be given by phone, email or in person – different advisors work in different ways. These days professionals are pretty flexible. In order to give you proper mortgage advice, mortgage advisors will need to a great deal of information about your personal finances. They want to determine that you can and will be able to make the mortgage payments. The last thing they want is to repossess your property if you fail to be able to make the mortgage payments. They will ask your permission before they give financial or mortgage advice. You will probably need to sign an agreement form saying that you agree to being given mortgage advices as opposed to just mortgage information.

When the mortgage advisor or mortgage brokers has taken all the information from you about what you want and your finances, you might, after agreeing which mortgage and which mortgage lender is appropriate to you, make a mortgage application.

The selected mortgage lender will scrutinise your form and carry outs some checks of their own

Some advisors gain their income form commission they earn from selling insurance policies and mortgages whilst others charge for giving mortgage advice. You are perfectly entitled to ask about what charges will be applicable in your instance.

Don’t be intimidated by mortgage advisors. Though they have trained for a considerable time to be able to offer mortgage and financial advice, they are human, just like the rest of us.

Andy Silk asked:


If you’re using a mortgage to buy your home but are not sure which one will suit your needs best, read this handy guide to mortgage types in the UK. Taking out a mortgage has never been easier.

Fixed Rate Mortgages – the lender will set the APR (Annual Percentage Rate) for the mortgage over a given period of time, usually 2, 3, 5, or 10 years as an example. The APR for the mortgage may be higher than with a variable rate mortgage but will remain at this ‘fixed mortgage rate’ level, even if the Bank of England raises interest rates during the term of the mortgage agreement. Effectively, you could be said to be gambling that interest rates are going to go up, above the level of your fixed rate mortgage interest rate. If this happens, your mortgage repayments will be less than with a variable rate mortgage.

Variable Rate Mortgages – the lender’s mortgage interest rate may go up or down during the life of the mortgage. This usually happens (though not exclusively) soon after a Bank of England interest rate change. Most people consider that opting for a variable interest rate mortgage is best done when interest rates in general are likely to go down. They can then take advantage of these lower rates when they occur. It’s a bit of a gamble but if they are right, it could really work in their favour.

Tracker Mortgages – have a lot in common with variable interest rate mortgages in that the APR of the mortgage can go up or down over the term. The key difference between a tracker mortgage and a variable interest rate mortgage is that the lender will set a margin of interest to be maintained above the Bank of England base lending rate. So, as the Bank of England, in line with monetary policy, raises or lowers the base lending rate of interest, so the tracker mortgage interest rate will follow. Over the lifetime of the mortgage, it could be said that the borrower will neither be better off nor worse off because of interest rate fluctuations.

Repayment Mortgages – you will be required to pay a proportion of the capital element of the mortgage (how much you originally borrowed) together with a proportion of the interest that will have accrued on the capital element, with each monthly repayment. In recent years, repayment mortgages have become highly popular over the previous favourite – endowment mortgages. This is because, unlike endowment mortgages, as long as you keep up your monthly repayments, you are guaranteed to pay the mortgage off at the end of the agreed term. Monthly repayments may possibly be a little more expensive but many borrowers say that at least, they have peace of mind.

Interest Only Mortgages – very common amongst borrowers who are looking to secure a second property. The reason being, with an interest only mortgage, the borrower will only be required to make monthly repayments based on the interest element of the mortgage. The lender will require the capital element to be repaid at the end of the term of the mortgage. Again, as with variable rate mortgages, this could be regarded as being a little bit of a gamble because the borrower is hoping that the property will be worth at least as much at the end of the term of the mortgage, as it was at the beginning, allowing it to be sold and the capital element of the mortgage to be paid off. Any capital gain on the property (although possibly subject to tax) is yours. It could be argued that experience tells us that property prices rarely go down in the long term, but it can never be guaranteed.

Capped Mortgages – a combination of the fixed rate mortgage and the variable interest rate mortgage. A cap or ceiling is fixed for a set period of time. During this period, if interest rates in general rise, above the capped interest rate, the borrower will not pay anything above the capped level. Correspondingly, if interest rates fall, then the rate of interest charged by the lender, will also fall so it could be argued that the borrower gets the best of both worlds. It could also be said that a capped rate is like having a set of brakes on your mortgage, but beware, the lender is also likely to charge a redemption penalty on this type of mortgage, making it less portable than some of the other options available.

Discounted Rate Mortgages – here, the lender may offer a reduced level of interest to be charged over a set period at the start of the mortgage term. Many first time buyers or people who expect their salaries to rise considerably during the discounted rate period opt for this type of mortgage but it should be noted that the reduced rate period will come to an end and when it does, the monthly mortgage repayments to the lender may rise sharply. The lender may also charge a slightly higher rate of interest compared with other types of mortgage over the rest of the term of the loan in order to recoup the monies that they have foregone during the discounted rate period. There’s no such thing as a free lunch!

Offset Mortgages – an interesting newcomer to the UK mortgage market, although still comparatively rare in terms of choice and availability. The mortgage is linked to the borrower’s current account. Every month, the minimum mortgage repayment is paid to the lender but where there is a surplus of cash in the account after other uses and debts have been paid, this is also paid to the lender. Over the months and years, the borrower can potentially pay off their mortgage much quicker and have accrued much less interest than with other types of mortgage provided that a reasonable surplus is maintained in the current account.

So, to sum up, the UK mortgage market has many types of mortgage; any or all of which may be open to the potential borrower, dependent on their circumstances. If you’re looking to take out a mortgage, remember that whilst your broker will take care of the vast majority of the work on your behalf, it may still take around 3 months to complete as there is an enormous amount of work that goes on behind the scenes with solicitors and searches, valuations etc. At least now you’re armed with all of tehinformation you need on each type of mortgage available to you.

This article is free to distribute however, please ensure that all links remain as in the original.

Shawn Thomas asked:


Choosing the right mortgage broker is important, as you want to make sure you save as much money as possible on the mortgage loan that you take out. Being picky about your mortgage broker is more than just a matter of trying to save a few dollars, though – the right mortgage broker will also help ensure that you get the best loan terms available to you, and that you will have someone that you can work with should any changes need to be made to your mortgage loan’s terms. Comparing mortgage brokers is not difficult, but it does require that you have a basic knowledge of what to look for in the mortgage loans that the different brokerages offer to you.

It is important that you understand exactly what a mortgage broker is, of course; unlike a traditional bank or mortgage lender who will offer you a mortgage loan directly, a mortgage broker will pair you with a lender that meets your needs and will act as an intermediary between you and the lender. Because of this you can often get a better deal on a mortgage through a broker than you would be able to directly, since they can do the “shopping around” for you. Different mortgage brokers may offer different rates and terms on the loans that they find for you, however, so it is still important to shop around and compare brokerages before choosing the one that is best for you.

Before you start to compare mortgage brokers, take the time to research the basics of mortgage loans online. Not only will this give you some useful information that can be used as a basis for your comparisons, but you may also be able to learn about mortgage options that you did not know about previously. This does not mean that you have to learn everything that there is about mortgage loans, of course; simply try to cover the basics of loan options, opening and closing costs, and interest rate plans. You may also wish to take the time to find out what the average interest rates in your area are as well as nationwide so that you will have a better idea of how good of a deal the rates that you are being offered are.

Once you have a basic grasp of the mortgage lending process, start looking for mortgage brokers who operate in your area. You should be able to find several using your local telephone directory or internet listings. The more mortgage brokerages there are in your area then the greater your chances will be of finding a good deal on the mortgage loan that you take out, since you will have a number of different options to choose from. Begin contacting each of the brokers that you find and request average interest rate and loan term quotes from each.

When you have collected quotes from a number of different mortgage brokers it is time to begin your comparison. Sort the quotes by the interest rate that is being charged, but make sure that interest is not the only factor that you look at. In addition to the interest rate that you have to pay there may be a number of other costs which can affect how good of a deal a particular mortgage is, and the terms of one mortgage offer may not be as flexible as those of another. Sorting quotes based on interest will at least give you an idea of where the various offers stand based on one of the most obvious factors of the mortgage, however, and can also make it easy to eliminate the offerings of any broker whose rates are much higher than the others.

You may also list the points next to each loan’s interest rate. Points are a percentage of the loan you pay either at closing or rolled into the mortgage principal that acts as a “buy down” of the interest rate. For example, a rate that is 1% lower than a comparable loan may have 1 to 3 points attached to it whereas loan number two has zero points. Depending on the amount you are borrowing, one of these loans may be less expensive than the other. Your particular situation will determine which has the lower overall cost.

Begin comparing the quotes that you have received based on the estimated monthly payments you will have to make, opening and closing costs, and any specialized terms or conditions that certain mortgage quotes might have. Read through the quotes of the mortgage brokers several times to make sure that you have all of the information that you need for your comparison, and begin removing quotes from consideration when you find them to be more expensive or to have more strict terms than some of the other quotes. Continue reducing your potential mortgage loan quotes until only two or three remain so that you can compare them more closely before choosing a mortgage broker. Once you have finished the comparison you should have an idea of the broker who will find you the best deal on your mortgage so that you can then begin the process of getting the exact loan that is right for you.

Shawn Thomas asked:


Taking out a mortgage loan is a major responsibility, and it is not one that should be entered into lightly. It is important that you take the time before you take out a mortgage to educate yourself about both your specific mortgage and about mortgage loans in general; this will help to make sure that you get the best deal that you can on the loan that you take out and will also ensure that you are going to be able to make your mortgage payments without any problem. While educating yourself about mortgage loans is not as simple as simply looking at interest rates, learning more about your mortgage before you take it out does not have to be difficult or complicated.

The first thing that you should do in order to learn more about the mortgage process is to take the time to learn a few basic definitions. The most important of these are terms such as principal (the amount that you have actually borrowed), APR (annual percentage rate, or the amount of interest that is being charged on your principal), and PITI (the components that are combined to determine your monthly mortgage payment: Principal, Interest, Taxes, and Insurance.)

Other common terms that you may want to know include balloon and interest-only mortgages (two mortgage types where you make smaller payments for five years or less, then pay the outstanding balance due on your mortgage as a single payment) as well as some of the additional costs that may be associated with taking out a mortgage loan. Such fees include application costs, closing costs, and brokerage fees, and in most cases they have to be paid out-of-pocket instead of being included in your monthly mortgage payment. Not every bank or lender charges all of the same fees so be sure to do some comparison shopping.

Once you have a grasp of some of the more common mortgage terminology, you should take the time to read as much as you can about how the mortgage process works in general. There are a number of books and websites that you can use to educate yourself about the mortgage process, detailing how it works from preapproval to making your final mortgage payment. Consulting multiple sources will help to make sure that you do not miss any important details that may be overlooked by a single source, and will also help to eliminate any bias that may be held by one source.

In general, the mortgage process begins with preapproval so that you will know how much you can borrow (which in most cases will only be a portion of the total value of the property being purchased) and will continue through the loan origination, credit checks, closing, and purchase. The property that is purchased will be used as collateral to guarantee the mortgage loan and ensure that the lender gets all of their money, and the lender will have a legal claim to the property (known as a lien) until the mortgage has been repaid in full. Once you have paid all of the money that is owed to the lender, the lien will be released and you will own the purchased property outright.

After learning about mortgage loans in general, it is time to start shopping around for a lender so that you can find the mortgage that will best meet your specific needs. Talk to various banks, mortgage brokers, and other mortgage lenders in your area, discussing the advantages of the loans that each offers and requesting quotes for the interest rates that they will likely charge you. This will give you an idea of how much you are going to have to pay every month on the loan that you eventually take out, and will also help you to get a feel for the various lenders in your area so that you will know which ones will give you the best deal. It is important to educate yourself about the mortgage process in general before you start shopping around for quotes so that you can ask questions about any loan terms that do not seem right as well as explore options that you might not have known were available otherwise.

When you have narrowed down your options to one or two potential lenders take the time to discuss your loan with each in depth so that you can get an idea of exactly what your final mortgage loan will be like. There is a required form called the Good Faith Estimate that your lender is required to provide; this form discloses all the fees and helps to determine both the cash required for closing as well as your final monthly payment. This will let you learn more about the specifics of each lender’s loan products and will help you to choose the mortgage loan that is best for you and your property.