Choosing a Mortgage Lender
By: Bwalya Mwaba | Posted: 11th August 2005
Choosing a Mortgage Lender
Just as there are many types of mortgages and mortgage deals to
choose from, there are also many sources where you can go to get a
mortgage. Your key choices are to use a mortgage broker, a more
general financial adviser, or shop around yourself and go direct to
the mortgage lender. For many people, choosing a lender means
finding a mortgage company offering the lowest APR rate.
If you decide to use an adviser you can choose between a specialist
mortgage broker and a general financial adviser. A general adviser
will look at all your financial affairs if you want, not just your
mortgage. As opposed to lenders who can only offer their own
products, an adviser can look at the whole market for you and
consider mortgages from a number of lenders. Advisers can also offer
you advice and information tailored to your needs. In the UK, All
firms or Individuals arranging or advising on mortgages must be
authorised to do so by the Financial Services Authority (FSA). If
you are unhappy with advice from an authorised firm you usually have
the right to complain and may be able to claim compensation.
As an alternative to using a financial adviser, you can arrange a
mortgage directly with a lender – like a building society, bank or
specialist mortgage company. A lender will only recommend their own
mortgage products although they may have several you can choose from.
When choosing a lender, you should consider the competitiveness of
the lender's rates, their fees and penalties, their customer service
and their reputation. You'll also want a lender you can trust, and
someone you can work with effectively. Remember you'll have to deal
with this company for many years to come.
1. Building Societies
Building societies are mortgage experts, they offer specialist
advice and they usually offer very competitive rates. Many national
ones have a branch in most major towns and cities while the smaller
ones tend to specialise in catering for home buyers in particular
areas. For example, the Cambridge Building Society specializes in
helping people who live in Cambridgeshire.
2. High Street Banks
Banks usually have years of lending experience and they have more
branches and greater coverage across the United Kingdom. Their
standard rates tend to be higher than those of building societies
but they often offer the best introductory offers on mortgage deals.
Some of the big banks now have special arrangements with building
societies where the building society is the one that handles all the
mortgage business for the bank.
3. Specialist Mortgage Lending Companies
Specialist lenders lend to a particular type of niche market. Many
of these specialise in providing mortgages for people in special
circumstances who would not normally be offered a loan by their bank
or building society. This includes people with adverse credit, the
self-employed, part-time employed and those purchasing overseas
properties. Many mainstream lenders have established specialist
subsidiaries for non-standard mortgages such as these. You may have
to deal with them over the phone, by mail or over the internet as
most of them do not have a wide network of branches across the
country.
4. Insurance Companies
Some insurance companies offer mortgages and other financial
products together with their range of insurance products. They may
sometimes offer certain deals in association with other financial
institutions such as banks but they do not specialise in this area
and they may not necessarily offer the best rates.
5. Intermediaries and Mortgage Brokers
Instead of going directly to the lender for a mortgage, you can
approach an advisor or broker to search the market for the best
mortgage deal for you. Some intermediaries are tied to particular
lenders and they may only offer products from their lender. Others
are independent so they have a much wider market to choose from. A
credit broker is a firm or person who introduces you to a lender for
the purpose of borrowing money. The task of the credit broker is to
obtain the loan you require on terms that are acceptable to you.
Whatever you decide, it's important to understand how mortgages are
regulated and sold in the United Kingdom. Buying with advice puts
you in a stronger position to complain and get compensation if you
later discover that the mortgage is unsuitable. You can read some
more articles about mortgages at:
http://www.commercial-mortgage-guide.org.uk/mortgages/
© Copyright 2005, Bwalya Mwaba writes for the The Commercial
Mortgage Guide. Visit our website for mortgage related news,
articles, tools and more:
http://www.commercial-mortgage-guide.org.uk/
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Bwalya Mwaba
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