Should I use a Broker?
Some home buyers wish to obtain a mortgage through a mortgage broker and others like to approach the lender directly. It is a matter of preference. If your circumstances are a little complex, e.g. past financial difficulty etc. then you may wish to consider instructing a broker to help find a suitable mortgage since lending criteria differ from lender to lender. A broker will be able to help you find the best product on the market suited to your circumstances since they should have up to date knowledge of the mortgage market. A broker will usually charge a fee for helping you find a mortgage.
Accordingly to an online ‘Money Marketing’ article dated 19 May 2010, brokers processed two thirds of all mortgages for the first quarter of 2010.
Should I approach the Lender directly for a Mortgage?
If you have uncomplicated financial circumstances and a good long-standing relationship with your bank or building society you may wish to approach them directly for a mortgage. They will arrange a meeting with one of their mortgage advisers and should be able to give you a decision as to whether you qualify, fairly quickly.
How can I find out about mortgages myself?
Research on the internet will inform you of the types of mortgage on offer by the various lenders together with their rates. Details of the various lenders can be obtained from the CML handbook.
Capital Repayment or Interest only Mortgage?
Residential mortgages can be repaid on a capital repayment basis or an interest only basis. With capital repayment you will be paying back the interest plus the capital as part of your monthly repayments. With interest only you will be paying just that – the interest element of the mortgage.
You will have to make arrangements therefore to repay the capital after the mortgage term expires if proceeding with an interest only mortgage. Your broker or lender will advise you on this. You should bear in mind that it is usually easy to switch between making capital or interest only repayments.
This is important to know so you can arrange your finances and budget accordingly if some months are tighter than others.