Planning Your Journey

This is typically deemed as one of the largest financial transactions you are likely to get involved with.   As such this may have far reaching consequences on your lifestyle for decades to come.   Getting it wrong should not be an option, as to do so could cost you thousands of pounds.

Take the time to investigate the wide range of options available to you with the multiplicity of mortgages you have at your disposal.  With a better understanding of what choices you have it puts you in a stronger position to negotiate your position.

So what is a mortgage?

This is a loan secured on the property and this implies that the lending company owns part or all of your home until you pay back the money.  Thus it follows that you cannot sell the property without pay off the loan.  If you do not keep up with the agreed monthly payments the lender can take possession of the property.

 

Risk versus Reward

A critical issue that must be taken into consideration is the interest rate. Such will determine your m monthly commitment s as clearly demonstrated on the table below

Making use of a mortgage calculator will help you determine the element of risk over time – It os also best to take into consideration a worst case scenario over time.  Thus protecting  yourself against any unforeseen circumstances.

How payments can vary

Mortgage calculator

Getting a mortgage

Adopting a structured approach to the process helps as indicated below

Work out how much you can afford

Proof of income such as wage slips for the last six months or P60 form or a letter from your employer confirming the salary and any bonuses or commissions that form part of your income.  In addition any other financial information such as life insurance critical illness policies or income protection – some of which can also be provided by your employer

As a self – employed individual or you run a business you need to provide valid business accounts – if possible audited accounts indicating income for the past 3 years – this will help the lender  confirm and determine your eligibility for a loan.

As part of the game plan shop around for the mortgage options available to you in you in the market place.  There are numerous online mortgage markets and comparison sites that you can navigate through online.

List of websites that you can investigate for mortgage options:

www.direct.gov.uk

www.moneysupermarket.com

Mortgage Lenders

Banks Building societies and Financial Houses offer their own range of mortgages available which is peculiar to their own product set.  Make the effort to investigate the options at your disposal.  If you are already with one of them, you can start off by approaching such with a goal of negotiating a god deal

Intermediaries

Mortgage brokers and independent financial advisers serves as an option in securing a mortgage.  Some intermediaries have their own deals which they have negotiated with lenders which are not available elsewhere.  In your quest the intermediary must tell you how many lenders they are searching against.

In addition,  the independent advisers must give you the chice of payning a fee fr their service or relying on the commission.

A mortgage broker can only use the term independent if they search the whole market – though they are unable to access consumer only deals

Insurance companies

Life intsurance companies emloy salespeople who are also mortgage brokers  – Like IFAs they may or may not specialise in mortgages

Estate agents

Some estate agents employ people in the branches who can give mortgage advice – mortgage brokers | IFA’s | life insurance representatives

Employers | Banks and financial institutions

There are times when the companies offer competitive mortgages as a benefit to their employees.  It would be wise to check if theses offers are available to you and what the consequences are of you are to leave the company.

Builders – Developers

They acan arrange loans as an incentive to purchase a property from them.  Due diligence and take it upon yourself to get a good adeal from the vendors in comparison to the marketplace  – making sure it stands up against the others – also watch out for the penalty clauses.  They are know to offer a part exchange deal by purchaseing your current home which is worth considering if you prefer  to avoid the hassle of dealing in the open market place.

 

Your rights as a mortgagee

As of October 2004 according to the Financial Services Authority (FSA) – Anyone involved in mortgage lending administration, advice and arranging must be a member of the FSA by law.  The FSA’s Mortgage Conduct f Business states that mortgage lenders and intermediaries must:

Give clear information

Anyone applying for a mortgage, mortgages services and information must be given in a standard format – “key facts” allowing for the comparison of mortgage and services from different lenders

Make price information obvious

All marketing information must be clearly laid out including the annual percentage rate (APR)

Recommend a suitable mortgage

Advice and recommendation provided must be based on personal needs and circumstances

Offer greater protection

In the event that you get into arrears with your mortgage there are rules in place to ensure that the firm should treat you fairly

Offer redress

If you have a dispute with your lender – you can take the matter to the Financial Ombudsman Service.  The Financial Services Compensation Scheme is then able to pay in the event that the firm is unable to be able to pay – as an option that it available to you.