A lot of people are unaware of just how much a mortgage broker can help you find the best mortgage deal.
It can be easy to forget to ask the important questions. Hey! Buying a new home is exciting, especially if you're a first-time buyer, so we don't blame you for nearly overlooking the serious stuff like interest rates, costs, and regulations.
Your mortgage broker is full of knowledge and expertise. But as the saying goes, if you don't ask, you don't always get.
We've made it easy. Here are the 10 best questions to ask your mortgage broker:
1. How much do you charge?
This is an upfront, important question to ask your mortgage broker as you begin your mortgage journey. No need to feel silly about it, they get asked 'How much do you charge?' all the time.
Some mortgage brokers will charge set fees, anywhere from £100 to £1000. Some will charge for the initial beginning conversation, and/or some will charge on the completion of your mortgage.
However, there are many mortgage brokers who won't charge you anything and instead get a commission from the lender.
Make sure you ask this question so you can budget for this potential fee.
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2. How much can I borrow? (Obviously, Sherlock)
I'm adding 'How much can I borrow?' into the best questions to ask your mortgage broker because, although obvious, it's vitally important.
This key question will determine the price you can afford for your new home. *Opens PropertyNews*.
Your broker will most likely run through an affordability questionnaire (also known as a fact find), which includes information on your employment, income, outstanding credit and debts, and your credit history.
You can start your fact find here and get ahead of these questions, to speed up your mortgage journey.
3. How much of a deposit is required?
Asking your mortgage broker this question will help you find out how much of a downpayment is required to secure your mortgage.
The deposit amount will depend on two things:
1: The value of the property (let's use £200,000 as an example)
2: The percentage of that value that the lender (the bank) is going to lend (90% as an example)
This is known as the LTV in mortgage slang. It roughly translates to: 'loan to value'.
The remaining percentage will be your deposit amount. in this example, 10% deposit = £20,000
Mortgage deals can vary so it's important to ask this question early on to your broker. If you're self-employed or buying a buy-to-let mortgage, you may require a higher deposit.
4. What type of mortgage is best for me?
One of the best questions to ask your mortgage broker is what type of mortgage is best for me... because there are lots of them! And the right choice will depend on your plans for the future.
Your mortgage broker will explain the pros and cons of each loan type and you can decide which is best for your financial situation. Or, if you provide them with some information they will be able to help you choose.
Your mortgage broker will also have detailed knowledge of the various help to buy schemes that you could be eligible for.
5. What's the Interest Rate and Annual Rate?
A broker will explain both rates in terms that are understandable. If you don't understand, ask them to explain further! The rate is usually calculated by the interest rate and lender fees divided by the terms of the loan.
6. Can you identify all the costs involved in getting a mortgage?
Questioning your broker for a full list of costs involved with getting your mortgage is extremely important for your budgeting.
A broker will be able to conveniently offer up the costs of getting a mortgage, organising property surveys, recommend solicitors, bank fees, and more.
It's also important to ask your mortgage broker if any of these fees will be refundable if your house sale falls through.
7. Do I have any penalties in my terms? E.g. Early Payment Penalty?
You’d think that lenders would love you for paying out a loan early—but that isn’t always the case.
Lenders don’t want you to pay your loan early because they want the interest payments.
Your Mortgage Broker can dig into your mortgage terms and help you find the fine print you're looking for.
8. Can you tell me how my credit rating affects my mortgage?
Lenders use your credit report to get information on how reliable you have been at paying back debts in the past. Store cards, loan payments, credit card repayments, and more are taken into consideration.
Your credit history might also affect your mortgage interest rate, in the sense that the types of mortgage you are offered will be affected by how responsibly you've borrowed in the past.
Asking your mortgage broker about your credit score while help paint a more realistic picture of your affordability and chances of approval.
9. What documents will I need to complete my mortgage application?
You may want to gather up the documents required to apply for your mortgage deal in advance. You can read our blog on 10 documents you'll need to apply for a mortgage here.
These documents range from proof of identity to payslips and utility bills.
On the Mortgage Propeller platform, you can digitally upload your documents with ease, and your broker can approve with the click of a button. You can start your application here.
10, How long will the mortgage application process take?
We want a mortgage, and we want it now! Well, it doesn't always happen in 4 weeks, sometimes it can take up to 3 months.
If your application and circumstances are straightforward, then the process should be quick. But if your application is more complicated, then you could prepare for a long wait. Ask your broker for their opinion.
If you're in a hurry, using a platform like Mortgage Propeller to upload your information in advance can help to speed up your application.
Remember:
You can ask your Mortgage Broker everything and anything (to do with your mortgage!). There are no such things as silly questions when it comes to this MAJOR decision.
If you find industry terms painful, ask them to explain in personable terms and they'll be happy to help. Get them to explain anything that you aren't sure about - even if it means they have to repeat themselves. They're there to help you get the best mortgage deal.
They are the experts, so you don't have to be.
