Mortgages & Finance

Most people at some stage in their lives will require to take out a mortgage to acquire a home or need to arrange finance for a variety of purposes from home improvements to the purchase of a new car. Certainly, taking out a mortgage is often the biggest financial commitment of anyone's life and should never be entered in to lightly without taking sound financial advice.

Until recently most mortgages, unless otherwise requested were for a fixed term of twenty five years. Hover, mainly as a result of rapidly escalating property prices, lenders have been offering mortgages over longer terms and  have been prepared to offer more than the usual three times salary amount.  Mortgages are often now seen as lifetime commitments and no one should enter in to one without professional advice as there are a seemingly endless amount on offer all with deferent terms and conditions and interest rates and more importantly different redemption penalties if you require to leave the mortgage deal early.

Often what appears on the a face of it to be a low rate of interest can have quite severe cancellation penalties attached to it and only  a trained professional can help you sift through this mortgage maze. Similarly any provider that is going to provide you with a " Cash Back " deal, is not simply going to let you walk away from the arrangement to go to a new lender. All the pitfalls need to be considered along with a view as to what you expect you personal circumstances will be in the future. This is especially important for younger first time buyers as their circumstances may change quite rapidly particularly if starting a family is in the offing.

The choice of where to obtain good quality advice is a personal one, you can obtain it from mortgage brokers, bank, building societies, financial advisors and indeed finance companies. However, it is important to check the status of each different source of advice and clarify on what basis the advice is being offered. If you want a truly independent view then often,  brokers and financial advises can offer you a larger number of products obtained from multiple sources.  If you approach a bank or building society, you may find that will only offer products from their own panel and thus your choice will be more limited.

In some cases, advisors may ask for a fee up front to arrange a mortgage for you, this is often as there is a lot of preliminary work involved in locating the best deal. If you are asked to pay an up front fee, ask if you will receive a refund if the advisor is unable to locate a mortgage deal for you. Straight forward mortgages can easily be obtained from most sources but if your case is a little more complex, you may have a poor credit history or require to borrow an amount beyond the normal multiple limits, you may find that a broker or advisor will be better able to serve your needs purely on the basis that they have access to a wider range of products.

Mortgages are subject to a number of conditions and are often offered in principle so as you know how much money you can borrow and thus your price range  before the contract is concluded. The lender will make certain enquiries in to your financial background to make sure that your are a worthwhile proposition. Secondly, the actual property itself must be "mortgage able" and to ascertain this status, the lender will arrange for a survey to be carried out usually by one of their in house surveyors. Surveys  fall in to a number of brackets, there is the basic one as mentioned above but many people now opt for the " Home Buyers survey, which is   fairly short and to the point, but will offer more than the basic lenders offering which is often just a drive by review It will have sufficient details for the lender to calculate that what you are paying for the property is a reasonable sum, also it will alert them to any structural problems such as damp or parts of the property that are in poor condition. A full structural survey is likely to be fairly expensive but this will give you an in depth report on the property and will alert you to most if not all potential problems. 

Providing that the property is deemed a mortgage able proposition, the lender will offer you a sum of money and by this stage you should have decided on what basis and what term you will repay the money. The are a variety of options available, in recent years, repaying a mortgage by means of an endowment was popular but these now seem to be out of favour and they have been the subject of much bad press. The straight repayment mortgage is now making a come back, under this arrangement, each month , you pay the interest and a little bit towards repayment of the capital sum. There are a large number of deals on offer, some over fixed rate interest terms, some a capped rate and some with even give you cash backs. All will come with a variety of clauses and redemption penalties and this is where a trained advisor will come in useful to explain all of your options to you. 

Until recently obtaining finance in the United kingdom was fairly easy, credit card companies and retailers were falling over themselves to provide credit . This type of borrowing along with unsecured loan arrangements represents the most expensive way to borrow money, interest is usually quite a bit higher than you could obtain under a mortgage , mainly because of the convenience and the fact that   the loan is unsecured thus the provider has more chance of making a loss.

Credit cards have proved to be extremely popular, once the initial application has been made and the card provided, you are free to spend up to your credit limit and once you have proved you can handle the repayments, often the card issuer will increase the credit limit. A cheaper way of borrowing money is by taking a secured loan, usually against your home ,.This will provide a cheaper rate of interest but of course the lender does have a claim on your home which will of course cause you problems if you default on repayments.