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.
by Oliver Whitehead - 11 April 2019