If you search on the web for advice on the things you should do when choosing a mortgage, you’ll get a lot of information back. Some of it’s good, some of it not so good. But as important, if not more so, is what you should avoid doing. Here’s our guide to the mistakes you’d do well to avoid making. Don’t approach your hunt for a mortgage in the same way you would if you were buying a washing machine We know that sounds obvious, but you’d be surprised at the almost laissez-faire way a good many people approach the business of securing the finance to buy their home. Put simply, buying a home is a huge investment – and almost certainly the largest single purchase you’ll have made in your life at that point. It’s fine to buy a washing machine from Amazon or another online retailer. If it doesn’t work, you send it back. If you realise there was a better model you could have bought, it’s not a calamitous financial mistake to have to live with. Choose the wrong mortgage provider or product, however, and you could be paying for it – literally – for years. Don’t obsess about the interest rate We’ve said this before, but it’s worth repeating. If the only thing you’re looking at is the interest rate, then the chances are you’re missing a trick. Yes, how much you’re going to pay each month is important and so that means the rate is a factor in your decision – but it’s not the only factor. Is the rate fixed or variable? If it’s fixed, how long is it fixed for? Are there early exit fees? Is there an arrangement fee? Will you be able to overpay if you want to, and if so, by how much? Just as importantly, is the mortgage provider reputable and do you believe you’ll get good support and care during the lifetime of the loan? The days of personal 121 contact with an account manager may be over, but your relationship with your lender remains just as important today as it always did. Don’t chase lower rates at the expense of lender reputation Even if you do put a lot of store by the interest rates on offer from lenders, they don’t always tell the whole story. If you saw what looked like two very similar cars on offer from two different dealers, and one was significantly cheaper than the other, you might be tempted to buy the cheaper of the two. But it’s always worth taking pause for thought. There could be legitimate reasons for two apparently identical mortgages being offered at different rates of interest. It could be that one lender is squeezing as much margin out of the loan as possible to maximise profit. Equally, it might be that they’re a bigger, more well-established and reputable lender, with bigger overheads and a better overall service. Don’t take a mortgage from an unregulated lender If you do nothing else (and we hope you’ll do a lot more than this), don’t take a mortgage with an unregulated lender, because when things go wrong, you have no easy recourse to get them put right. Unregulated lenders aren’t subject to the same lending standards as regulated banks and building societies and don’t offer the same protection. Do your homework and ensure your lender is reputable and regulated by the Financial Conduct Authority. If you’re in any doubt at all, hit the pause button and reconsider. Use a professional mortgage broker If you only follow this final – and, we’d obviously argue, most important - rule, you’ll also avoid making the first four mistakes, too. A good, professional mortgage broker will also be regulated – giving you protection against bad advice – and will know the market inside out. They’ll know what deals are available, what products will best suit your circumstances (not just today, but in the longer term, based on your priorities and ambitions) and the lenders who can offer you the best options for buying your home. At Oportfolio, we’re mortgage experts regulated by FCA and with years of success behind us – so if you’re ready to take the next step in your property journey, we’re ready to help you. Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story! To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
What size deposit do I need to be able to get a mortgage? It’s a question we hear asked a lot, especially from people who haven’t been through a mortgage application process in a good while and who worry that lenders have changed their policies around what percentage of a property’s value they’re prepared to lend against (the loan to value, or LTV). The simple answer to the question, rather unhelpfully, is that it depends. Following the financial crisis of 2008, lenders – both banks and building societies – were forced by regulators and by the Bank of England to tighten their lending criteria to ensure customers were able to afford to repay the loans they were offered. What that meant in practice was that the majority of mortgage lenders became more risk averse. The days of widespread large multiple lending, for example – where mortgage providers were offering loans calculated at four to six times annual salary – certainly became as rare as hen’s teeth. The previously common 100% mortgage – where a lender would stump up a mortgage to the full purchase price of the property – also became harder to come by (though they have made something of a comeback in the early part of 2019). And, inevitably, there was also an effect on the way lenders viewed the deposits that customers were able to make. But this was less about the amount involved and more about how the level of impact the deposit had on the lending risk concerned. It doesn’t take a degree in economics to be able to understand that a customer who can put down 40% of the value of the property they want to buy is a more attractive proposition than someone who can only get a deposit for 5%. But having a small deposit certainly doesn’t mean there’ll be a problem getting your mortgage application approved. Far from it, in fact. Having any sort of deposit sends a positive message to the mortgage provider that you’re prepared to share the financial risk and that you’ve thought and planned ahead for this moment. That said, some lenders will have limits on the LTV they will accept and so to that extent, there may well be a minimum deposit a lender would expect to see for any given mortgage product. However, assuming you’ve cleared any LTV hurdle, of far more interest to a lender in determining whether your application is approved or not will be your ability to afford the resulting repayments. Remember, too, that the more you’re able to put down, the less you’ll be borrowing and the lower your repayments will be (or, depending on your priorities, the shorter the mortgage term will be). If you already own your home, then the equity in it will probably make up all or part of any deposit you intend to put down. But remember, you’re likely to also have to find money to pay Stamp Duty, legal fees, surveyor fees and any other costs associated with your move. And if you plan to do any renovation work on your new home, you’ll need to consider how you’ll be paying for that, too. Talking to a professional mortgage broker like Oportfolio can be really useful in helping you to plan how to arrange your move from a financial point of view. So if you’re looking at a move during 2019, why not get in touch and have a chat with one of our friendly team? Want to know how other people feel about working with Oportfolio to buy their dream property? Watch Gus and Selena’s video story! To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
The mortgage market has never been entirely straightforward, even before the financial crisis of 2008 ushered in a new era of lender caution and tighter controls on affordability. But for many people, the prospect of applying for a mortgage is now even more daunting than it used to be. In fact, a survey last autumn suggested that millennials – who now make up around a quarter of the UK population – are so put off by the prospect of going through a mortgage application that they would rather break a bone or undergo dentistry to avoid it! And we’re not talking metaphorically here, either. A theme we often see is that of assumed lendability. What we mean by that is that when we first sit down with clients, many of them have come with a preconceived idea of the amount a lender will – or won’t – be prepared to lend them. When you think about it, that’s hardly surprising. Here on the Oportfolio website we have a free mortgage calculator which we encourage you to use to determine the kind of budget you might be able to work within. But it’s important to remember that our calculator tool and others that you might find dotted around the web are only ever intended to be a guide that helps you to focus on a realistically achievable property target: if the calculator estimates you may be able to borrow up to £600,000, then the likelihood is there’s little point in looking at £1,000,000 properties (unless, of course, you have £400,000 to put down as a deposit. But equally, it could be that you can borrow a little more than you thought – perhaps, for example, putting a £650,000 or even a £700,000 property within your reach. (For balance, of course, we should also say that your personal circumstances may mean that the most you can borrow is actually substantially less than the figure generated by the calculator.) The point is, the number the calculator spits out is designed to help you to make key decisions. Can I borrow enough to buy the property I really want? Can I afford the repayments? Is it actually worth moving forward, or would I better off waiting a while? Once you’ve decided your potential borrowing power is in the right ballpark and you want to step up your search for your dream home, you need to come and talk to someone like us so that we can talk through the real-life options that might be available to you. That’s exactly what Gus and Selena did. Gus and Selena are a lovely couple who’d fallen in love with a property called The Gothic House but who’d given up on any real hope of buying it because all the signs they’d come across seemed to suggest they wouldn’t be able to get a big enough mortgage to be able to make a realistic offer. When the subject came up in a conversation with Gus’ friend, James, he suggested they come and talk to us. We’d already worked with James who had referred a number of his customers and clients to us and he told them that if anyone could find the right mortgage, it was us. And so it proved. Gus and Selena got in touch and after we spoke it quickly became clear that it buying the property wasn’t just possible, but the finance could be structured in such a way that we could make Gus and Selena the most attractive buyers in a competitive sale. Having initially thought they would have to sell their existing home, we knew that instead they could let that property, which covered the mortgage payments on it. Then, because their business was doing well, they were able to borrow more than they had thought was possible. In a short time, they had gone from believing their dream home was out of reach, to being effectively chain-free, cash buyers with a mortgage in place. Gus now believes it was that combination that won them the property, even though better offers from other would-be buyers may have been on the table. “The Gothic House was out of our range – or we thought it was out of our range … but then we spoke to Oliver and he put everything into perspective, and it turned out it was in our range after all,” he said. The moral of the story is that because we’re mortgage experts, we have specialist insight into and knowledge of the mortgage market – and so, what you think you can borrow and what you can actually borrow are often two different things. That’s because we know about mortgage products that you won’t find on the high street or online, we know what lenders might be prepared to lend in a range of different circumstances and we can suggest different solutions to improve the chances of your mortgage application being approved. If you’ve found your dream home or even just the next property on your journey to your dream home, come and talk to us to get an accurate picture of what might be possible. Want to see The Gothic House and hear from Gus and Selena first hand about their Oportfolio experience? Watch the video here To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
It’s often said that buying a house can be one of the biggest sources of stress you can have in life, which probably explains why a recent MoneyWise report suggests a quarter of all borrowers find the mortgage application process stressful. It’s hardly surprising, when you think about it – after all, you’ve made the commitment to move – possibly to the house of your dreams – and you’ve invested time and, probably, some money in the process. By the time you’re applying for a mortgage, you’re likely to be emotionally invested in the outcome. Many, if not most, are approved – on average around 65,000 a month, yet because different lenders adopt different criteria, and because the common lending criteria imposed on all regulated mortgage providers is now stricter than it was before the 2008 crash, it’s hard to be 100% sure your application will be agreed. So, whether you’ve managed the process yourself or you’ve used a broker to put the application together, what can you do if the worst happens and your mortgage application gets declined? Here are some ‘dos and don’ts’ and some tips to try to make sure your next application is accepted. #1 - Don’t panic! We can’t stress this enough. There are many reasons why your application might not have made it through the lender’s assessment. The most common is that you’ve failed to meet the lender’s own criteria. That doesn’t mean you won’t meet the lending criteria for another bank or building society, though, because as we’ve already said, each lender uses a different scoring system to assess risk and liability. Also, some banks and building societies may specialise in lending under circumstances that others won’t. Take a moment to breathe. #2 - Don’t immediately apply to another lender Because you don’t know why your application has been declined, you don’t know whether the problem is something that needs to be addressed for all lenders or whether it’s just been an issue for that bank or building society in particular. Multiple failed applications may show up in your credit history, making it even harder to get your mortgage application through the next stage. So don’t act in haste. #3 - Talk to a mortgage broker about your options If your failed application was handled by a broker, you may feel there’s no point in talking to another one. But all brokers are different, with different experiences and different areas of expertise. It may be that a broker can review your paperwork and see an issue that hadn’t been obvious to your previous broker. If you managed your declined application yourself, it could be that you’ve made a simple error or omitted some key information without realising it. Any reputable mortgage broker should be able to spot this and potentially get you back on track. #4 - Do your homework (or make sure your broker has done theirs) Having an Agreement in Principle – where your mortgage is approved based on basic information and subject to a full application and review – is always going to give you a better chance of your full application being accepted. If you’re declined even though you’ve had the AIP, it could be for one of a number of reasons. It’s possible a more thorough credit review has turned up an undeclared adverse issue, for example. Or it may be that you’ve applied to a lender who, based on a deeper understanding of your circumstances, was never going to lend to you in the first place. Maybe you’ve changed jobs unexpectedly and didn’t know your proposed lender’s policy was to only accept applications where the applicants had been in the same job for 12 months or more. There are lenders out there who will accept applications from borrowers with poor credit, CCJs or who have been in their job for a short time or face a range of other challenging circumstances – and as long as they’re aware of that up front and the application is managed properly, there’s a good chance you can still get your application accepted by applying to the right lender. #5 - Ask the lender to explain why they declined the application For reasons which are understandable, some lenders can prove difficult to pin down on this. If it’s to do with something in your credit history then their access to the detailed data can be limited, even if they were inclined to share the information with you. At this point, they may point you in the direction of your credit score. But it’s important to know whether you were declined because of an adverse credit event or because you didn’t meet their policy in some other way, so it’s always worth you or your broker pushing them on the reason – it may be the clue that helps you to resolve the problem. While you may be anxious about the prospect of your application being declined, you shouldn’t spend time worrying that a ‘no’ is the end of the road. With specialist help and advice from an advisor who knows the mortgage market well, even applications that may look like they’re dead in the water may be able to be rescued. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
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