Choosing a mortgage

By the Beresfords Marketing Team - 6th March 2014

Choosing a mortgage can be a minefield.

There are so many factors to consider and let’s face it, this is the one decision that you don’t want to get wrong as it could cost you an awful lot of money.

So whether you’re a first-time buyer, are buying to let or are thinking about remortaging, what should you bear in mind when looking for the best product?

“The most important thing to remember is that there is not a ‘one size fits all’ when it comes to mortgages. It depends entirely what your circumstances are and where you see yourself in the future.

“We always advise people that the first port of call should be to see an independent mortgage adviser,” said John Lineham, the director that heads up the mortgage division  at Beresfords estate agents. “If you just wander into your local high street bank then that’s OK but they can only offer you the mortgages that they provide. We would advise people to speak to someone who deals with all the banks and all the building societies. Then they can sit down with you and ask all of the questions about your situation and exactly what you need the mortgage for.

“That’s the best option if you want the best deal,” John added. “Otherwise the alternative is to walk up and down the high street, knocking on the door of every single bank and building society and asking them what their best deal is. Also, bear in mind that some lenders do not have a high street presence so you’ll be missing out on those.”

An independent mortgage adviser will also look at your future needs as well as current circumstances for example a policy that is due to pay out, and they will make sure you have the facility to pay off a chunk of your mortgage with the least hassle and minimum penalty.

On the Beresfords website, there are live mortgage tables so clients, whether they are buying a property or just re-mortgaging, can get a quick overview of the choices out there, which can be a useful tool.

Surprisingly, there are still some people who don’t shop around for mortgage deals and just go with their own bank ,who they’ve usually been with  for a number of years.

“As everyone says, your house is the most expensive purchase of your life, yet you get the feeling that some people spend more time shopping around for the right flat screen TV than they do for their mortgage,” John said.

If you are a first time buyer, you will obviously need a deposit of some kind, but the situation is nowhere near as dire as it was two or three years ago when people had little hope of getting on the ladder unless they had a sizeable deposit of at least 20 per cent.

The government’s Help To Buy scheme has already helped around 6,000 people put in offers on a home and apply for a mortgage since it launched in October.

“Lenders are trying to be much more flexible for first time buyers now and schemes like Help To Buy have made a big difference,” John said. “If there’s a time to buy, then the time is now.”

What about the pitfalls, what do us customers need to be looking out for when we take out a mortgage?

Each bank and building society will have its own lending criteria too and their own rates to offer.

But in the current financial climate, although some lenders are offering great rates, they might be clawing some of the money back by charging much higher fees for taking out one of their mortgages. So if you take out a lower rate mortgage, you might not end up any better off once you’ve factored in the fees charged.

Another pitfall that gets people into trouble is not being entirely open with their mortgage adviser about their financial situation.

“The one thing I would say to people is to be honest with your mortgage adviser,” John said. “Tell them everything at the start including any financial issues you’ve had. There’s no need to feel embarrassed, it’s nothing they wouldn’t have heard before. If you aren’t open with them, it will come out later, then you may end up with additional credit checks being carried out on you which is not good for your credit rating.”

To help prevent future financial distress, estate agents and financial advisers recommend taking out mortgage protection too. This is an insurance policy, such as life cover, which pays your mortgage if you can’t, such as through illness, redundancy or death of a partner. “It’s surprising how many people don’t have cover, but it’s very, very advisable,” John commented. “It’s a huge weight off your mind if things go wrong.”

The most important message when choosing a mortgage however is to seek independent advice.

“Try to forget what deals you’ve seen advertised on the TV, in the banks’ windows, or what rates your friends are saying they have got,” John advised. “You don’t want a deal that is best for the bank or the building society – an independent mortgage adviser is there to get the best deal for you, which is exactly what you want at the end of the day.”