Earlier today I went through my mortgage options with my mortgage broker, Lee. That was certainly fun. There’s nothing more satisfying than arranging a life time’s worth of debt. It’s liberating. Truly.
The best Mortgage Policy my Mortgage broker found for me
Currently, the best Mortgage policy he could find for me is with Northern Rock; 5.47%, fixed rate for 2 years; 25 year policy. It’s the same one he mentioned to me previously. It’s not the best deal on the market I’m sure, but it’s definately not the worst. I decided to go for it.
The Mortgage Policy I didn’t Qualify for
I noticed on his screen a deal that had a rate of 5.22% attached to it. I leaned over and pointed at his monitor and said, “what’s that deal? I want it”
Lee smirked and said, “that applies to borrowers that have a minimum of 10 properties already” I said, “ok, I guess I can apply for that one in 2 years”. Lee just laughed.
Applying for the policy
Lee will now confirm that I accept the offer with Northern Rock. If they’re in agreement, they will write to me offering me the loan.
Generally, when applying for a buy-to-let mortgage, a lot of lenders don’t take into consideration the borrower’s salary. Instead, they assess how much rent the property they’re buying can realistically achieve. The lender will then decide how much they’re willing to lend based on the rent.
Well, that’s how it should work in theory.
Tips for picking the best mortgage policy
Here are a few tips I would recommend to anyone that’s either in the process of getting a mortgage, or considering it:
- Shop around– ALWAYS shop around for the best mortgage policy. There are new products coming onto the market every day, and it’s an extremely competitive market. It literally is dog eat dog. It’s worth using a Mortgage broker, but it’s also worth independently looking for a mortgage on comparison websites like moneysupermarket.com – they often have mortgages that brokers don’t have access to.
- Don’t pay your Mortgage Broker– Mortgage brokers should NOT typically charge you. They get a commission from the actual lender. However, I’ve encountered with mortgage brokers that charge the buyer a service fee, as well as making commission from the lender.
- The Mortgage Broker– don’t feel like you have to be faithful to ONE mortgage broker. Different brokers have access to different mortgage deals. It’s well worth talking to a few brokers and see which can find you the best deal.
- It’s worth using a broker– not everyone uses a broker, but they can extremely useful, especially for those that don’t understand mortgages very well. They can help you find the perfect loan offers or options to fit your needs. Most of them have a lot of money lending contacts with different offers for you to choose from.
- Interest-only or Repayment– I would advise everyone to be thoroughly familiar with the difference between an Interest-only and Repayment Mortgage
- Understand your policy– thousands of people every year struggle to pay their mortgage simply because they didn’t understand the terms and conditions of of their policy. Make sure you understand exactly what you’re taking on with your mortgage.
- Standard Variable Rate– when you’re looking at various mortgage policies, pay close attention to the lender’s Standard Variable Rate (SVR) after the fixed rate has come to an end. The SVR is the rate you will be paying AFTER the fixed rate.
- Fixed Rate– along with the SVR, pay close attention to what the fixed rate is and for how long.
- Overpayments– a lot of borrowers want to pay their mortgage off early, so they make overpayments. This is when a borrower pays extra money, usually in a lump sum, to reduce the balance. However, some lenders charge penalties for making overpayments. If you want the option of making overpayments, make sure there is no penalty fee for doing so.
- Affordable– make sure you can realistically afford your mortgage. Even if you have the intentions of renting out the property and using the rent to cover the mortgage, there may cases when your tenant defaults on rent, or you have a period where the property is vacant. Ask yourself if you will be able to cover the mortgage in those circumstances.