Find your mortgage

In order to purchase a property most people will require a mortgage. A mortgage is a loan which is secured against the value of your home until you have paid it off.

Typically mortgages run over the course of several decades, although the term of the loan can be shorter or longer. If you fail to make your agreed repayments the lender can repossess your home, in order to sell it and get back the value of the loan.

A lender will assess you for suitability before agreeing to you taking out a mortgage with them. They will assess your outgoings such as household bills and personal expenses to make sure you will be able to pay the mortgage payments.

As mortgages are typically long-term loans, it is important that if rates rise in the future you are still able to afford the monthly repayments. Lenders may refuse to offer you a mortgage if they do not think you meet their minimum eligibility criteria.

You will typically have two stages in a mortgage application. Stage one is a basic fact find to work out what type of mortgage you can afford and would suit your requirements.

Your mortgage advisor will ask you questions to work out what type of mortgage is most suitable for your needs and circumstances. Comparing this with your financial situation, they will identify how much a lender is likely to be prepared to lend to you as a mortgage. At this stage your advisor will also describe the key information about the mortgage product and any fees or charges that are applicable.

Stage two is the mortgage application process. Your advisor will support you through a full fact find and affordability assessment. This process will ‘stress test’ your ability to pay your mortgage should rates rise in the future.

Once your application has been accepted you will be provided with a binding offer. There is a reflection period of 7 days or more to give you time to reflect before progressing. If you have limited time to complete on a house purchase, you can waive this reflection period.

A ‘whole of market’ mortgage broker is able to recommend mortgages from a much wider pool of lenders than other types of mortgage brokers. Some mortgage brokers only work with specific lenders, limiting the range of mortgage products they can advise on. While a whole of market advisor will have a much wider pool of mortgages they can recommend.

Types of mortgage brokers include:

• Tied brokers: typically employed by the mortgage lender, they are only able to recommend mortgages from this one lender
• Multi-tied brokers: limited to a panel of mortgage lenders, they can only offer mortgages from their selection of lenders
• Whole of market, or independent, brokers: have the flexibility to choose from all, or possibly many, mortgage lenders

Typically, a whole of market advisor won’t have access to every mortgage product on the market but will have many more options to select from. For example, they can’t advise on products that are only available if the homeowner goes to the lender directly. However, they can offer broker-only deals which homeowners cannot get access to without using a broker.

To qualify for the term ‘whole of market’ a mortgage broker must at a minimum be able to offer enough options to be representative of the mortgage market. Realistically, the majority cover a vast range of lenders. If you are unsure there is no harm in asking to see the full range of mortgage lenders your broker can advise on.

Mortgages come in many shapes and sizes. Whilst it can be tempting to pick one with the lowest interest rate, there are other variables that can make a big difference to how suitable one mortgage is over another.

Fixed or variable rate? If you are looking for certainty a long term interest rate fix can help you to plan your monthly payments. However, a variable rate could save you money. It is worth speaking with your advisor to work out which option would work best in your circumstances.

Loan-to-value. Are you able to increase your deposit? The higher your deposit, the lower your loan-to-value which can help secure lower interest rates on your mortgage.

Overpayments and payment holidays. If you may need some flexibility in your mortgage it is worth looking for the amount you are able to overpay. Overpaying your mortgage can significantly reduce both the amount of time you have the mortgage for, and the amount of interest you pay. Overpaying some products also opens up the possibility of payment holidays, meaning you can stop paying your mortgage for an agreed amount of time.

Interest only or repayment. Repayment mortgages pay part of the capital as well as interest off each month, at the end of the term you will have paid off the entire loan and own your home. Interest only mortgages simply pays off the interest on the loan. You will need to have a separate method of repaying the original loan at the end of the mortgage term.