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In our previous mortgage articles we explored what mortgages are and how much you can practically afford to borrow. In this article we will explore how you go about securing the best mortgage for you. The key part of this article, is you. Everyone's personal situation is different so it's important that we understand what you really need from a mortgage. Look at the mortgage related questions below help you understand what type or mortgage is going to be the best for you, these are questions that most mortgage lenders will ask.
Most people get their mortgages directly from a building society of bank, simply selecting from the range of mortgages that are on offer as as suggested by their mortgage advisor. This traditional route to obtaining a mortgage is typically straightforward and the bank or building society may provide or recommend solicitors and other support as part of the mortgage product, particularly if you are a first time buyer.
Before you jump of your chair and head down to your local branch, lets first look at the alternative means of securing a mortgage and their relative benefits.
We cover banks and building societies in our first paragraph so let's start by taking a look at mortgage brokers.
A mortgage broker is an individual who is qualified to provide advice relating to mortgages. Mortgage brokers have a duty of care to you and are bound to provide a mortgage product which is relevant and right for you. A mortgage broker works for your, not the mortgage lender which means they can research and analyse the entire mortgage market in order to provide you the best mortgage deal. Some mortgage brokers will work from a specific niche mortgage product range, others will use a broader market. They are duty bound to tell you what their mortgage portfolio is and, after recommendation, must be able to justify why they have suggested a specific mortgage product. The big advantages of a mortgage broker over a traditional bank or building society are:
The downside is that you do pay for a mortgage broker. Fees vary and they will tell you upfront of any associated mortgage costs. Don't be deterred though, this fee is typically well earned and the deals the brokers find for you will likely mean their fee is more than covered by the savings. You can read more about mortgage brokers in our article "Why should I use a Mortgage broker?"
An Independent Financial Advisor (IFA) is a professional who has been trained to offer Independent advice on financial matters as requested and instructed by their clients. IFAs are regulated by the Financial Conduct Authority (FCA) and must meet strict qualification and competence requirements. If you are unsattisfied with the advice or product you get from an IFA, you can take action.
An IFA is like a Mortgage Broker with a wider portfolio which means they can access other financial products like pensions, loans etc. Like Mortgage Brokers, IFAs can access the entire mortgage market and can also have special access to mortgage products that are not widely available.
Independent Financial Advisors work for you, their responsibility is to ensure that you receive the correct financial advice and that the product(s) they recommend are the best for you. The IFA will set about doing this by getting to know you, what you are looking for from your mortgage and your wider financial plans. They will work with you to confirm your budget (financial position), mortgage preferences and your objectives from life. This process is called a 'factfind'. Whilst this may seem full on, the advantage of an Independent Financial Advisor over a Mortgage Broker is that the IFA can provide you with a more holistic financial assessment and package, certain mortgage lenders will look more favourably on a financial assessment from an IFA than a Mortgage Broker.
You can read more about IFA in our article "Why use an Independent Financial Advisor".
It is very unlikely that you will take an execution only mortgage. Access to these products is limited and typically requires a thorough knowledge of the mortgage process. If you were to apply for an execution only mortgage you would be expected to know exactly what property you want to buy, the value of the property, breakdown of deposit and costs, details of the mortgage duration, type of mortgage and associated interest rate .
You would also need to prove to the lender that you haven't taken any advice, have no guarantees that the mortgage is suitable for you and they you are happy with this agreement. You will still need to prove to the mortgage lender that you can afford the mortgage, the process is very similar in terms of mortgage approval.
Execution only mortgages are risky as, if something goes wrong, you have no one to complain too or fall back on for support.
Choosing a mortgage is likely to be the biggest financial decision of your life. Taking mortgage advice is the best approach unless you are very experienced in financial matters, especially mortgages. You will most likely end up paying for mortgage advice but that advice could save you considerable sums in balance.
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