When applying for a mortgage, it’s a good idea to use a mortgage broker. They can offer their expertise in sifting through the competitive market of lenders to find you the best deal.
When you first start working with a mortgage broker, you will probably have a lot of questions in mind. But there may be some you haven’t thought to ask. In order to fully understand the mortgage process, and to get the right deal for you, we’ve compiled a list of the most important things to ask your mortgage broker. So whether you choose a broker who is recommended, or you’ve found independently, you’ll know they can do the job you need.
Are you regulated?
In the UK, mortgage brokers are required by law to be registered by the Financial Conduct Authority (FCA) before they can practice. Always check that your chosen broker is registered before doing business with them. You can do this by asking them to show you their documentation or by checking the FCA’s register
. This way, you are protected from bad advice and have access to more lenders (as most will only work with regulated brokers).
What's your fee and when do I pay it?
Once you know that your mortgage broker is properly regulated, it is important to ask about their fees. There are a number of ways in which a mortgage broker can take payments.
They can charge you a set fee for their services, this will usually be between £500 and £1000. Alternatively, they may take a cut of what you pay your chosen lender. You will not pay the broker this money directly as it is added on to the lender’s rates. It’s an invisible cost, working like a referral fee. They also might utilize some combination of these two methods.
Once you know how the broker expects to be paid it is useful to find out when they expect this money. Most often payment is taken when your mortgage application is accepted.
What can I afford and what’s available?
Though it can be helpful to go in knowing what kind of mortgage you want, there are so many different types available in the UK that it’s a good idea to seek your mortgage broker’s advice. They will have the insider knowledge to work out what type is best for you based on your budget, preferences, future plans, and the market at the time.
It’s important that you go through your finances honestly and openly with your mortgage broker so they can assess what type of mortgage you can afford. They can also help you to make your accounts and finances look more appealing to potential lenders, such as giving you advice on improving your credit score.
How long does the fixed rate last?
Many lenders will offer the incentive of having a fixed or discounted rate for their mortgages when you begin repayments. This will usually last between 2 to 5 years. Often the longer you tie the rate in for, the higher the rate is. This is because you are paying for the certainty. So a 5 year fixed rate may cost more per month than a 2 year one.
Your fixed rate will be more affordable than the Standard Variable Rate that it switches to when the allotted time frame ends.
Therefore, it is important to seek your mortgage broker’s advice in figuring out what the long-term cost of a mortgage will be for you and making a note to look into remortgaging when the fixed rate ends. This can be with the same lender, or you can switch to another. It can feel silly to be working out remortgaging a few years down the line, but thinking long term will allow you to make the right choice for you.
How big a deposit do I need?
Putting down a deposit means you are paying for a percentage of the property upfront, before repaying the lender for the remainder in your mortgage repayments.
Different lenders will require a different sized deposits from their clients in order to accept a mortgage application. Most UK lenders will require between 10-20%, though some can be higher or go as low as 5% under certain circumstances. Your mortgage broker can help you figure out how big a deposit you need to put down for certain lenders, so you can decide which work best for your budget.
The higher your deposit, the more options you’ll have from lenders, and the better rates you’ll have access to.
What documentation do I need?
You are likely going to need to provide a fair amount of documentation to lenders when applying for a mortgage, this may include payslips, tax returns and utility bills to name a few. It is important, early in the process, that you ask your mortgage broker what kind of documentation you will likely need to supply them with. This way you can gather it all together in advance to make things easier.
They can also give you their advice on using this documentation to enhance your application. For example, making sure your pay slips mirror what you state about your finances rather than raising confusion with potential lenders.
Are there any other fees?
You will likely not just be paying the lender your deposit and mortgage repayments; they will often have other fees that you may not realise you have to budget for. This can include set up fees, valuation fees and even cancellation fees. It’s a good idea to ask your mortgage broker to investigate any additional fees you may need to pay, to prevent yourself being caught off-guard.
They may be able to help you negotiate and find out whether any of these fees can be refunded to you if the purchase falls through.
Can I overpay on my mortgage?
You may just be focused on getting the mortgage, rather than paying more on to it, but if you are likely to want to overpay in the future, it’s worth asking. Overpaying is where you can put more money towards your mortgage. It is usually up to 10% of the mortgage value per year. Overpaying can reduce the cost of your mortgage long term, and cut down the time you spend paying it off.
However, if your mortgage does not allow for overpaying, or you pay back too much, you’ll be charged. If you are someone who wants to be mortgage free sooner rather than later, consider choosing a mortgage that lets you overpay.
Any other questions!
When it comes to applying for and negotiating a mortgage, you are going to be given a lot of information and you will probably have a lot more questions than the ones we have covered here. Always remember that you can always ask your broker any questions you have; they are there to get you the best deal and provide the best advice they can.
They may even have knowledge you did not expect them to have, such as information about insurance or other financial matters. Never be afraid to ask them questions.
Speaking to a professional mortgage broker is a worthwhile investment to make sure you get the best mortgage deal for you.