Rates, Rates, Rates
Everyone wants the lowest rate mortgage. There is nothing easier to find, whether you are a mortgage consultant or whether you simply prefer browsing the web yourself. Once you have found the best rate is when you actually need to speak to professional consultants like ourselves, as many people fail to avoid the product pitfalls.
You have the lowest rate but did you bother to look at the following:
Product Pitfalls | Reasons to be wary |
Arrangement fees -Paid to the lender for securing a particular mortgage deal. | Some higher rates may carry lower arrangement fees and might work out cheaper per month on your payments. For example a 5.5% rate may be cheaper per month than a 5% rate with £1995 fees. A mortgage consultant will work out the true cost. |
Early Repayment Charges | If you re-mortgage or pay off a large chunk you may be liable for a penalty that could be several thousand pounds. |
Rate expiry period and tie-ins | You could be tied-in after a deal ends or have your deal end before you need it to. |
Loan to Value percentage limitations (LTV or LTV's) | Some lenders will have a maximum loan limitation based on your deposit / equity and the property purchase price. |
Flexibility of the mortgage | Some lenders will not be so flexible if you are thinking of taking a payment holiday or making large overpayments. |
Lender criteria restrictions | For example: no new build property with some lenders and a minimum of 3 years accounts for self-employed with others. |
A mortgage consultant will be able to tell, from the questions he asks you and the relationship he builds with you, which lender will not be the best option due to:
1. You or your property not meeting lending criteria
or
2. Mortgages not suitable for your requirements.
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Examples:
1. John found the lowest rate with Chelsea building society for his Buy To Let. He wanted to buy a new build flat and rent it out for £1,200 per month. He worked out that he would make £300 per month profit with a low rate from Chelsea. After submitting an agreement in principle on their website, he found that he would not meet their criteria; at the time they were not accepting new build flats for BTL.
2. Dave wanted a mortgage that he could pay a lump sum in two years to reduce the balance significantly as he was expecting a bonus. He only found out after submitting an application for the best rate that Cheltenham and Gloucester would only allow 10% overpayment of the loan balance in one year. This did not suit him. He spoke to a mortgage consultant who advised him that Northern Rock (a lender that he wouldn't have even looked at) allow you to make unlimited overpayments and leave all but a £1 in the account without penalty.
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Will your bank adviser / IFA be there when there are problems? Our advisers will.
So you have the best rate...... great. What's the point of having a cheap rate if you don't get the property you are purchasing?
- A bank won't be there when you have problems with the survey and you need to resolve the issues - you are on your own.
- When someone puts in a higher offer on your property, the banks won't be able to assist and most IFA firms have a policy not to deal with estate agents - we can.
- Most importantly, our advisers will make sure you get into the property by making every effort to work with solicitors, estate agents and the banks.
Hopefully these basic scenarios have provided very typical examples of how and why people go wrong when looking to search for a mortgage on their own. A mortgage adviser will be able to tell you within minutes which mortgage deal will be the most suitable to your requirements. Our advisers will be there when there are problems at 6pm on a Friday evening. Why not speak to a consultant today for free, no obligation advice.
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