10 Questions to Ask Your Mortgage and Protection Advisor
It might be that time in your life where; you move out of your parent’s place and seek some independence but, have no desire to pay for someone else’s mortgage, or you and your partner could have decided to move in together, or you’ve just finally found your family home, whatever the reason for a mortgage, make sure you’re well informed.
When speaking about mortgages we can so easily get lost in the details. Our team of expert mortgage brokers at McLean Financial Services has compiled 10 key questions for you to ask your Mortgage and Protection Advisor to ensure you’re getting the right information.
1.What do you (advisor) do?
Your advisor should talk to you in detail about the deal. As an advisor, they should do their best to ensure that you understand all the financial jargon, any abbreviations, colloquialisms, industry acronyms and especially, the fine print. A mortgage is, usually, the largest debt you’ll ever take on in your entire life. Mortgage and Protection Advisors have a duty of care to every client to ensure they understand fully what a mortgage entails including what happens if you are unable to keep up with your repayments.
Talking from experience, your Mortgage and Protection Advisor should support and guide you throughout the journey of buying and protecting your home. Mortgage Advisors have the ability to search through thousands of deals to ensure that the mortgage you have been offered is the most suitable for you. On top of that, a good Mortgage and Protection Advisor may have access to exclusive mortgage rates through a vast network like PRIMIS, for example.
A Mortgage broker should take care of all your admin and speak to the lender on your behalf. So that all essential updates go through them, ensuring that actions are taken with pre-emptive haste should lenders include additional requirements or eliminate important clauses. Sales Support teams should be experienced with handling the bureaucratic procedures of lenders, solicitors, and all the parties involved in your mortgage application, all the way from submission of the mortgage application to you moving in.
2. What do I (client) need to do?
Your first few chats with your Mortgage and Protection Advisor will be very detailed. The more the Advisor knows, the better they can source a bespoke mortgage for you.
Once they have all the details, mortgage experts will be able to start their research. Afterwhich, deals will be discussed with you, along with the rationale as to why a certain mortgage product and lender has been selected for you. Bear in mind, suitability isn’t always about the “lowest” mortgage rate. With the ever-changing criteria and lending conditions, a mortgage and protection advisor is best placed to help you navigate this.
Be prepared to provide an extensive list of documents and be sure the advisor uses secure methods of communication to facilitate the easy transfer of your sensitive information. Regular updates should be provided so you are kept in the loop. At least once a week. Should your circumstances change during the application stage, you should get in touch with your mortgage broker as quickly as possible. The sooner they know, the sooner your expert can find an alternative solution.
3.What if I don’t fit the “norm”? i.e foreign currency, furlough, multiple paid roles
The “norm” is vastly overrated, especially during a global pandemic. Going back to question 1, your Mortgage and Protection Advisor will have found out all they need to know and more. Whatever your circumstances, there is usually a way forward.
Your mortgage broker should be able to find a mortgage deal for you or give advice on the next steps. Whether you’re on furlough, have multiple part-time roles or paid in foreign currency, or indeed anything else that isn’t “conventional”, your mortgage broker will be able to help.
4. Why do I want insurances?
You would never, not insure your car or belongings. Insuring your life and protecting your income and family seem to be areas where people are less likely to get insurance.
Ask yourself what would happen if you could no longer work? How would your mortgage be paid? More importantly, how would you look after your other regular bills? And feed yourself? Then think of the worst-case scenario…what would happen should you die?
It’s not a question of wanting insurances but needing them for if and when the worst things happen.
5. Why shouldn’t I go direct to the lender?
You absolutely can and if you have an existing mortgage, sometimes your lender may give you a preferential rate. However, your lender will not look at every other lender out there and recommend a better rate if there is one. Your lender will only give you rates that they have thus, limiting you to a handful of products.
A good Mortgage and Protection Advisor will give you choices, then help you narrow down the selection to suit your needs. Helping you make an informed choice.
6. How does a lender check affordability?
Lenders all have their own way of working out affordability (the amount you can borrow).
The main things they’ll look at are:
- Your income (bonuses, ad hoc payments and anything which isn’t your basic income may not be used at 100%).
- Your outgoings such as car payments, gym memberships, childcare costs and takeaways (yes, you read that correctly!) all have an impact on your borrowing.
- Your credit file – there are ways to check your credit file for free. Experian and Equifax offer free trials (just remember to cancel!). We use https://www.checkmyfile.com/credit-report.htm?ref=mcleanfs&cbap=1* as you can sign up for a free trial and allows you to see if there are any defaults, missed payments, County Court Judgements (CCJs) against your name.
- The number of dependents such as children or spouses.
The vast majority of lenders have affordability calculators that you can try.
7. What is used to calculate what I can borrow?The majority of lenders will work from your declared income, take off your commitments and look at what’s left. For day-rate contractors, there are a few lenders who will look at contract value.
If your pay is made up of lots of additional payments such as overtime, bonus, commission, unsociable hours etc then a lender may look at a percentage of it. If there’s a continuous history of those payments over a length of time then a lender may be able to use all the income towards the borrowing.
8. How does a new-build differ from buying an older property?
A new-build property is one that’s never been owned before. Builders offer incentives such as
- Deposit contribution
- Money towards land tax
- Upgrades towards kitchen units
- Extras such as wardrobes/shelving
- Turf in the garden
These are just a few, it depends on each builder as to what they offer and when. The level of incentives accepted by each lender is different. You might be getting an amazing deal from the builder but your lender won’t give you a mortgage. The level of incentives is perceived to have a detrimental effect on the value of the property, always best to find out before reserving.
Older properties don’t come with incentives like this usually, so a purchase is much more straightforward.
9. Why are the conditions covered by insurances important?
By insurances we mean life, critical illness and income protection etc. Check the wording of your policies. For instance, if you have a heart attack, the severity of the heart attack needs to be determined before a policy will payout.
They say the devil is in the details and it is very true for these types of insurances. If you have pre-existing conditions then a protection provider may exclude certain cover in their policies. It’s always best to be upfront with your medical and family history. We also stress that the cheapest cover you can find isn’t necessarily the right cover for you.
A big tip we give our clients is to get insured early, in your twenties. Most policies have a fixed monthly premium that will not change. You can add to the cover as your needs change over time, such as when you have a life partner and/or children.
10.What happens if it all goes wrong? i.e mortgage application is declined.
It is not the end of the world. Depending on the reasons for the decline, we can still work to place your mortgage application elsewhere. For the majority of our clients, this doesn’t happen. The time taken to find out your needs at the beginning helps our advisors find the most suitable mortgage and lender for you.
If you are unable to repay your mortgage for any reason, then your home may be repossessed.
Your Mortgage and Protection Advisor can be called upon at any time after you’ve moved into your new home or if you need help to make a claim on one of your insurances. Never hesitate to get back in touch with your Advisor. They will be delighted to help a returning client.
If this has given you food for thought, you can get in touch for an appointment to assess your needs and requirements. Call 01224 947 670 and book your appointment with one of our Mortgage and Protection Advisors.
*We are an affiliate of Check My File. If you sign up with them, we receive payment for this. You are eligible for a 30-day free trial which is £14.99 per month thereafter and can be cancelled at any time.