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The Pros and Cons of Using a Mortgage Broker in Lincoln

The Pros and Cons of Using a Mortgage Broker in Lincoln

Why Should I use a Mortgage broker in Lincoln? | MoneymanTV

Deciding to buy your first property is a challenging task. Therefore, you must take your time, look around for various options thoroughly and make an informed decision.

As you might anticipate, we believe there are some excellent reasons to use a mortgage broker in Hull. Whether the brokerage service is online, you can still pay a visit directly to the lender. Even in technological advancement, we find that most people still refer to a mortgage broker. Hence, we will take you through the pros and cons of both methods.

Advantages and Disadvantages

Firstly, a well-versed mortgage broker will take the time to have an initial conversation with the applicant to help him decipher if you are mortgage ready to make an application. When contacting us and gathering the necessary details, one of our mortgage advisors in Lincoln will make sure to shop around and get the best deals possible.

One of the most notable advantages of going with a mortgage broker is valuable expertise in the home buying or refinancing process. Mortgage brokers have ample industry experience to lean on when offering mortgage solutions to their customers.

Similarly, our mortgage broker in Hull also has access to try and find wholesale rates on home loans. These rates can be lower than the retail interest rates, helping borrowers save a substantial amount of money over the life of a home loan.

Most importantly, a Mortgage broker can be your point of contact from the time you first call them right up to when you finally get the keys of your house in your hands, and we will guide you through the entire process.

Bank vs Broker

On the contrary, going to a bank helps save you a broker fee, saving yourself a reasonable amount. In earlier years, another significant advantage of a bank was that the branch manager knows an individual’s finances in and out. However, that all went by the wayside when credit scoring came in and is no longer the factor.

Likewise, some Lenders offer exclusive ‘direct-only’ deals that a broker would not have any access. Lenders do this to attract a wide range of applicants to make a good spread of business from consumers and brokers alike, turning exclusive products on and off when deeming necessary. On the other side, some products may only be available via the broker and not direct with the lender.

From 2014 onwards, lenders got restricted to sell mortgages on a non-advised basis to just anyone. Up until that point, many applicants felt like the non-advisors had been trying to force actual advice on them. They weren’t able to benefit from some consumer protection that goes with mortgage sales conducted by professionally trained mortgage advisors.

Lenders were coming to terms with and hence the issues present in these services led to a significant shift towards more applications getting made via mortgage brokers who are quick enough to offer you same day mortgage service.

You also need to check carefully if a lender is willing to lend you a considerable amount of money. It does not matter how good a lender’s deal might seem, but he should lend a significant amount. For this reason, people opt to go to an apt and professional mortgage broker in Lincoln.

Handling Difficult Cases

Nowadays, mortgage applications are no more straightforward. Many factors make a case more complicated. A few of the examples are as follows:

– Poor credit history
– Too much debt
– Payday loans
Self-Employed Income
– Mixed source of deposit (savings/gift)
– Let to Buy (keeping your current house and buying another)
– Contract workers/zero-hours contracts
– Affordability

In the past years, lenders could stand out from the competition by offering a better deal to the applicants. In the current era, this is different because the lending criteria vary from one lender to another. Some lenders lend more to Self Employed applicants or take a more empathetic view of their credit report’s previous discrepancies.

When you explain your case to an experienced mortgage broker in Hull, there is a possible chance that they have encountered the same thing earlier in the past, allowing them to personalize their service and help you through the process. With extensive experience in the field, your mortgage advisor will hopefully be able to recommend the most suitable lender for you at the lowest rate possible.

More than that, it is not just about getting the Mortgage. Even if the application itself is self-explanatory, we offer extensive experience and knowledge to our clients. For example, we will discuss how much we will deliver on the property they are buying. Our team of mortgage advisors in Hull can recommend other professional services such as Solicitors and explain the different types of protection and survey available.

Responsive Service

Another significant advantage of using a mortgage broker is that the brokers are far more responsive than some lenders. Delivering personalized service is the differentiating factor between the broker and a lender.
Besides, another significant reason for hiring a mortgage broker is that it helps you save time. Most customers prefer a broker because they are too busy nowadays. they might need a mortgage but have no time to get it done so that our advisor will take the weight off for you.

You only need one application with a mortgage broker rather than individually filling out forms for every lender. Your mortgage broker can also provide a comparison of any loans recommended; guiding you to the information that accurately portrays cost differences, with current rates, points, and closing costs for each loan reflected.

Mortgage Advice in Lincoln | Mortgage Payment Holidays

At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday on the condition that they needed it. Most lenders followed the Government’s guidelines and did their best to help out their borrowers during these hard few months. 

We felt that it is best, to sum up, what mortgage payment holidays are, what lenders are doing, and who can deliver you with help and advice through these next few months. 

What is a Mortgage Payment Holiday?

Mortgage payment holidays are agreements you make with your bank, building society or mortgage lender, allowing you to take a break from your monthly mortgage payments for a set period. In the case of the current COVID-19 crisis, homeowners are being granted 3-months relief.

The 3 months will be added on at the end of your term or your payments will be recalculated at a slightly higher level, meaning you will still have to pay those 3 months back eventually.

Your interest, however, carries on as normal, meaning you’ll technically be paying an additional 3 months of interest on top of what you’ve paid already.

Most lenders would likely prefer to not extend your mortgage term, as you may end up going beyond their standard retirement age. There’ll be more information on this over time.

Depending on the mortgage deal you have in place, you may be able to pay off a lump sum later on in the year to bring your mortgage in line with where it would’ve been had you not taken a holiday.

Mortgage Payments Holidays are available for those with residential mortgages and Buy to Let mortgages, meaning landlords will also have help if their payments are affected.

What is the Government Proposal?

The full proposal is in detail below:

  • Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.
  • The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that they are impacted by COVID-19.
  • This means that lenders will not complete an income and expenditure assessment, or an assessment of alternate payment options as ordinarily required under MCOB.
  • This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where the operation of collections teams made be also impacted by COVID-19.
  • Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.
  • Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

Mortgage Payment Holidays: How do I apply?

To discuss your options for Mortgage Payment Holidays, we would recommend speaking to a Mortgage Advisor in Lincoln to start with and not jumping straight into taking a holiday.

We’ll be able to take a look for you first and see if this option is something worth your time. Lenders will no doubt be facing an influx of calls, needing to be free to speak with the most urgent matters over everyone else.

We’ll look through your personal situation and see if there are any other options for you first before you decided to take a Mortgage Payment Holiday.

For a customer, up to date with payments, not in arrears and impacted by COVID-19:

  • The customer would contact the lender and inform them that they are impacted by COVID-19.
  • The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.
  • No evidence will be sought from the customer.
  • The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.
  • At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.
  • The lender notifies the customer that if they wished to complete a full assessment now, there may be other forbearance options more suitable to the customer.

Mortgage Payment Holidays – What does this mean for my Credit Score?

Generally, these can show up on your credit score as a negative mark, but most lenders have said if your case is linked to the virus, they’ll make sure it doesn’t affect your credit score at all.

It’s important that you speak directly with your lender to ask them this, recording their response. Also take the date and time, as well as the name of who you spoke to, to avoid any confusion later on. Different lenders will handle these things differently than one another.

Will I still be able to remortgage or take a Product Transfer with my lender?

Controversial for some, but there is now evidence that lenders are asking borrowers to try and not make changes to their mortgage whilst within the holiday period. This means, for the time being, you can’t take out a remortgage or product transfer.

In simpler terms, borrowers reaching the end of their current product may be forced to move to the higher lenders variable rate. This means many borrowers who act too quickly could find themselves on a Mortgage Payment Holiday that gains interest on a more expensive variable rate.

This is another reason why we highly recommend speaking to a Mortgage Advisor in Lincoln first, to determine the right path for you to take. If possible, try arranging a transfer prior to asking for a holiday, as that seems like a more sensible option.

What “Other Options” are available?

Some lenders are offering a temporary switch to interest-only, in order to reduce monthly payments by a large amount, while not adding on any further amount to the loan, by still servicing the interest each month.

You may not need to convert the entire mortgage to an interest-only mortgage and it may be that putting only a portion of this mortgage on that basis could give you room to breathe.

Those who have savings may prefer remortgaging onto an offset basis. This would reduce their monthly payments whilst keeping their savings safe and intact.

For example, someone with a £500,000 loan and £100,000 in savings would only pay interest on £400,000 reducing their payments accordingly.

For others, remortgaging onto another lender, calculating the cost of any early repayment charges, maybe all you need to ease the pressure you currently face. You could also simply extend your current term, thus spreading your payments across a longer time frame.

To discuss any of these options, or to just have a helpful chat about your current situation please contact us and we’ll see how we can be of assistance.

Gifted Deposit FAQ’s | Mortgage Advice in Lincoln

What is a Gifted Deposit?

A gifted deposit can be either the full amount or a portion of the deposit that is gifted to you, with an agreement that you don’t need to repay the money.

How Can Gifted Deposits Help?

Gifted Deposits come in handy when you have enough money for your monthly repayments but can’t afford the initial deposit. Having more gifted deposit available may also open you up to better rates from a lender.

It can also help if you’re on a lower salary and can afford the monthly mortgage repayments but are unable to save your initial deposit.

Who Can Gift The Deposit?

Predominantly it is your parents who can gift you the deposit. This can be both birth and adopted parents. You may see this online as the “Bank of Mum & Dad”. There are potential alternative family members who could also be considered when looking at utilising a gifted deposit.  This is very much dependent on individual lenders so would require care when trying to find the right mortgage lender.

Do Your Parents Know You Need Help?

We often find that clients aren’t aware that their parents can help with their mortgage, or don’t feel like they can ask them to. The reality is that most parents are more than happy to help their children, wanting them to get on the property ladder.

Statistically, taking out a mortgage is better than renting, due to you being able to potentially pay less per month. The deposit can often come from inheritance, although parents have been known to gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their own property.

Gifted Deposit VS Loans

Most lenders won’t accept a loan as a means of paying your deposit. This is down to the uncertainty that you’d have enough disposable income to pay back both the loan and the mortgage simultaneously.

Is There a Maximum or Minimum Gifted Amount?

There is no maximum limit on the amount of gift you can receive although I know of at least one Lender that insists you put in at least 5% deposit from your own funds.

Who Can Benefit From a Gifted Deposit?

The people who benefit the most from this tend to be First-Time Buyers in Lincoln and Home-Movers in Lincoln. It can also be useful when in conjunction with the Help to Buy Scheme in Lincoln, as the required 5% deposit, depending on the lender, can be paid via Gifted Deposit.

What Proof is Required?

Generally speaking, all lenders will require a Gifted Deposit form. Depending on the lender, you may be asked to provide further proof and ID (things like donor ID or bank statements).

Agreement in Principle and Soft Credit Searches

A Mortgage Agreement in Principle is what you are given once you pass the Lenders credit score to qualify for a Mortgage. Often shortened to AIP, this allows you to make an offer on a property you like. It’s can also be helpful when negotiating on house prices, as it shows the seller you’re serious about your offer and are prepared as a First-Time Buyer in Lincoln.

What effect does an AIP have on your credit score?

This is dependant on whether the lender decides to use a Hard Credit Search or a Soft Credit Search. Below are the differences between the two;

Hard Searches:

Hard Searches go more in-depth than Soft Searches. The main difference is that Hard Searches are likely to affect your Credit Score. If you have a good Credit Score however, you don’t need to worry going into this as a First-Time Buyer in Lincoln.

Soft Searches:

The more likely option these days is that a Lender will carry out Soft Searches. These usually needing less information and in most cases leave your Credit Score unaffected.

Does an AIP Guarantee a Mortgage in Lincoln?

Although they can be a game-changer, a mortgage isn’t always guaranteed. The lender will need you to provide them with documents in order for the Underwriter to make a final decision.

There is often small print included on Agreements in Principle that may easily be missed. When customers reach out for assistance with their Agreement In Principle, at times we have found they’ve been turned away at full mortgage application stage.

The documents you will be required to provide can include; Identification, Payslips, Bank Statements and more. As your Mortgage Broker in Lincoln, we take pride in helping our customers, whether they are Moving Home in Lincoln or Self-Employed in Lincoln.

Is My AIP a Necessity When Making an Offer?

You may be able to get away with this, however, most estate agents will want evidence that you are able to proceed.

How Long Will My AIP Last For?

AIP’s usually need renewing after around 30-90 days, although this isn’t a worry. The main reason we recommend getting one so early is to avoid being told your dream home is no longer available for purchase.

Getting your Agreement in Principle sorted also means you don’t always need to buy the first house you see. It’s a simple process, so if it expires you can easily get another.

How Much Deposit Do I Need To Buy A House in Lincoln?

How much deposit you need to buy a property depends on your circumstances and what it is exactly what you are trying to do. Here we explore how much you might need given your own personal situation.

Why Do I Need A Deposit Anyway?

In years gone by 100% mortgages were readily available and indeed before their demise, Northern Rock was offering 125% loan to value mortgages, that is to say, if you were buying a property valued at £100,000 they would lend you up to £125,000 (where did it all go wrong?!).

Lenders need you to put down a deposit simply to reduce their lending risk. If they lend you 100% of the purchase price then for some reason you fall into arrears and they need to take possession of the property then it only takes a small dip in house prices for them to suffer a loss (and they don’t like that).

Also, there is a school of thought that says if you haven’t invested some of yours or your family’s money into your home then you might find it a bit too easy to “walk away” should the going get tough and you were struggling to meet your monthly payments.

If you are not in a position to save up say, 5% of the purchase price yourself then it could be argued that you’re not quite ready to get onto the property ladder.

Will the government assist me?

If you can find 5% from your own resources then you could qualify for the Government’s Help to Buy equity loan scheme. This applies to new properties only.

You put in 5% and the Government loans you up to 20% to make up a 25% deposit. After 5 years you need to look at paying the equity loan back possibly by way of a remortgage or from savings you have been able to make in the meantime.

I’ve Got 5% Deposit – Is That Enough?

At the moment, yes 5% is enough in lots of circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify.

There are lenders out there that would consider you for a 95% mortgage with an average credit score but the rate of interest would be higher.

My Credit History Is Poor – How Much Do I Need To Put Down?

Many of the specialist Lenders want you to put down at least 15% deposit if you have a poor credit history, once again as above this is simply to reduce their risk in case a repossession occurs.

It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not impossible.

What About Buy To Let?

You’ve always needed to put down a larger deposit for Buy to Lets and most Lenders at the moment are looking for 25%.

Can I Take Out A Loan For The Deposit?

This could be possible but the vast majority of Lenders won’t let you do this, essentially this would still be 100% lending.

Can Someone Gift Me A Deposit?

Yes, this happens all the time. Generally it’s “Bank of Mum and Dad” gifting or other family members but even family friends can gift you money as long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift.

Are There Any Circumstances At All Where I Don’t Need A Deposit?

If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the Right to Buy scheme then normally you don’t need to put any of your own money in as the equity is already “built-in” to the deal.

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Why get Mortgage Advice in Lincoln?

Most people only arrange a mortgage every few years whereas Mortgage Brokers are working with Lenders on behalf of clients day in day out.

As such we know which Lenders can process your mortgage application offering both a competitive interest rate and avoiding long delays in processing.

Here are the 3 main advantages of seeking mortgage advice?

  1. Compare Mortgages
  2. Criteria Criteria Criteria
  3. Stress Busting

Compare Mortgages

Before the days of the Internet, comparing mortgages was a long and tedious exercise. Saturday mornings would be wasted as customers traipsed from Bank to Building Society looking for the best deal on offer. Of course some of this can be done online now but with so many things to consider it’s still far from a straightforward exercise.

In June 2013 Which? conducted research on 1001 Homebuyers and Homeowners to rank 5 two year fixed rate mortgages in order of total cost over the 2 year period and only 5 (0.05%) ranked them correctly. With all the fees and charges and exit penalties from existing deals, it can be very confusing.

We use daily-updated mortgage sourcing software so at any given time I can recommend the most suitable mortgage for all my clients within just a few clicks. Saves you time, and should save you money.

Criteria Criteria Criteria

It’s all very well sourcing the best mortgage deal, but getting it might be an entirely different story!

There are numerous reason people are declined for a mortgage now, including low credit score, length of time in employment/self-employment, failing the affordability calculator – and the list goes on and on.

Trying different Lenders and then not being able to proceed for whatever reason can also adversely affect your credit rating. Every time you apply the Lender in question will carry out a credit search and too many of these on your file makes it look like you’re continuously being declined – not good!

It’s best to speak with us in the first instance to find a Lender that you meet criteria with, then take things forward from there.

Stress Busting

It has been said that after the death of a close family member and divorce, that moving house is the most stressful experience you can expect to go through, especially if you’re selling a property and trying to complete your new purchase at the same time. My job is to take some of that stress off your shoulders and make sure your mortgage application runs as smoothly as possible.

The best thing you can do is talk to our Mortgage Advisors in Lincoln before you have found a new home. That way you will know that you can borrow enough to be able to proceed and, even more importantly, that you can afford the mortgage payments now and in the future.

There’s a lot to organise what with the legal aspects of the purchase, packing, dealing with Estate Agents etc and the feedback we get regularly from customers is that they were glad to have a Mortgage Advisor in Lincoln on their side right the way through the process. We deal with people in the same situation as you every day – give yourself one less thing to worry about.

Lincolnmoneyman.com & Lincolnmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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