A mortgage is the biggest transaction of your life. Everyone knows this. So it’s surprising how many people go into it without taking any kind of mortgage advice. As a result, many people end up paying far more than they need to.
So yes, generally it is a much better idea to look for mortgage advice before going for a mortgage. But the problem is that the quality of mortgage advice that’s available varies wildly from one adviser to another.
The problem is that most people who decide to go for mortgage advice don’t actually know exactly what they are looking for. So what consitutes good mortgage advice?
• Good mortgage advice should explain the different ways of repaying your mortgage – for instance, interest only or capital repayment. The adviser should make sure you are clear about the pros and cons of each method.
• Anyone providing good mortgage advice will do a thorough assessment of you as the customer. This assessment will include your financial situation – i.e. your income, your credit rating, and how much of a deposit you can provide – your mortgage needs and your property preferences. Without this it is impossible to know what product is right for you.
• Another measure of good mortgage advice is that the adviser can access the whole of the market and select a product that is right for your situation. Many people who call themselves “mortgage advisers” are tied to particular lenders and so can only access the products of that lender.
• Good mortgage advice must help you to be clear about the different ways of paying interest. The adviser must explain what is meant by fixed rate mortgage, standard variable rate mortgage, tracker mortgage etc. and help you choose the right one for your situation.
• Good mortgage advice also includes explaining about mortgage terms and the effects a longer or shorter mortgage term would have on your payments – for instance, taking your mortgage over a longer term might mean your monthly payments would be less, but you would pay more interest overall. You also need to be clear about penalties for early repayment, if there are any.
The quality of the mortgage advice you receive will make a big difference to your ability to enjoy your life as a property owner. If you find the advice you are getting isn’t up to standard, go somewhere else before you take the plunge.
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