Do you need an adviser? The short answer is 'no'. Unless you want to be sold another expensive endowment policy or term life insurance! Anyone giving mortgage advice, whether an independent financial adviser or a tied-financial adviser, mortgage broker or intermediary, wilI usually want to be paid to remortgage you. Which is fair since the adviser is doing all the legwork. However, you'll be picking up the bill somewhere along the way, either in upfront fees, commission, or worse, extra and unnecessary life insurance. You don't need to pay anything unless an hour of your time is worth more than, say, £250. Anyway, you've already paid for mortgage advice so why fork out more? There is no substitute for taking charge of your own financial affairs. If you must approach a mortgage adviser reading the remainder of this website will, at the very least, arm you with sufficient knowledge to look beyond the packages he or she offers. On the plus side, many of the smaller lenders offer some of the best deals through intermediaries, but you'll need to make an informed judgement as to whether the content is suitable for you.
Moreover, if your credit history is chequered, an adviser could be the most convenient route to sorting out the wheat from the chaff. Fortunately, not all mortgage advisers charge. They may well receive their commission directly from the lender. But it is in your interest to establish how they receive their commission before reviewing deals. You already have an adviser? If you currently have a financial adviser and he or she hasn't discussed ways of saving you money on mortgage interest, consider inviting your adviser round to your home. When he or she arrives, ask why you haven't been told about this 'investment' earlier. Then embarrass your adviser by producing this website! It sounds harsh, but why would you let anyone in the financial services industry who is supposedly looking after your finances continue to do so when he or she has overlooked such an obvious and safe method of saving you large sums of money? Or perhaps has sold you under-performing endowment policies that do nothing more than line the adviser's pockets at your expense? Of course, good financial advisers are worth their weight in gold (perhaps not a good analogy with the recent slump in gold prices!), Many financial advisers don't touch mortgages. Even if they do, they don't necessarily give bad advice. The problem is you don't know beforehand whether their advice is good or bad - until it's too late. The fact remains, though, that financial advisers are salespeople with the goal of making money for themselves first and you second. You've been warned!
Lending guidelines From the mortgage brokers point of view, you're a risk! As such, they have to assess whether you're a good risk or a bad risk. And their lending criteria help them decide what category you fall into. It doesn't matter that you already have a mortgage - your circumstances may have changed considerably since you took your original mortgage out. Neither does it matter that you always make your mortgage payment every month (although it helps!). Your property may have fallen in value. You may have large debts now. Or your income may have dropped. Having said that, lenders need to lend money if they're to profit. It's their decision after all. To this end, the lender takes each application on its current merits, assessing both your current personal status and the property on which the there is a secured loan. Obviously, if you're sticking with your existing lender, processing your application is much faster since your lender will already know your circumstances. Better still, you probably won't need a valuation and the lender's solicitors will prepare all the legal paperwork. The main things a new lender will take into consideration before advancing you the loan are income, your current credit commitments, and the property, all of which are discussed below in more detail. Beyond this, you'll need to:
State the mortgage term (lenders won't let you remortgage with under five years remaining); State the method of repayment (interest-only, repayment, or split);
State whether you're a resident of the UK (it's hard to sue a nonresident in the event of mortgage loss);
State your employer's name and address (to corroborate income and employment details); State your marital status and dependants (and details of maintenance payments if any);
State proposed occupants 17 years of age or older who won't be party to the mortgage (England and Wales only);
Provide P60s of all applicants;
Provide your current mortgage statement;
Provide at least six months' bank statements for all applicants;
Provide two pieces of identification to prove you are who you say you are (for fraud prevention)
When it comes to filling in your mortgage application, make sure you have the necessary paperwork to hand - it makes life a lot less frustrating! Income Lenders typically base the borrowing capability on a multiple (usually three) of the gross income of the main borrower plus all secondary income. If overtime, bonuses or commission are guaranteed you can add them on; if not, the lender will use its discretion as to what can be safely added on.
For sales-related occupations, the mortgage broker or mortgage lender normally takes an average of the previous three years' income. Many lenders exceed these multiples, for example, if your future prospects look healthy or when interest rates are low. But in general, income multiples are there to protect both the lender and the borrower and ensure monthly mortgage payments can be safely met. Credit commitments If you have a hire purchase agreement, a persona] bank loan, or possess credit cards or charge card, the lender will need details. For two reasons: first, to determine your ability to pay the mortgage loan; and second, to assess your credit worthiness. If you have a personal loan with, say, two years remaining at £50 a month and £2,000 on your credit card (with a minimum monthly payment of £100), the lender will deduct your yearly contribution to these debts from your gross income. This new figure is used as your gross yearly income. So, say, your gross annual salary is £17,000, the lender will deduct £600 (12 months x £50) plus £1,200 (12 months x £100), and use £15,200 (£17,000 - £1,800) as your gross yearly income. The lender will also run a credit search to check your credit history. If you have defaulted on any payments in the previous six years or have been in arrears, it will be detected. Provided you disclose this information (and have cleared the debt!) the lender will usually use discretion and override its credit scoring system. Non-disclosure makes lenders nervous