In this article we'll cover the many benefits of using an Edinburgh mortgage advisor and where you can find the best mortgage advice in Edinburgh.
Whether it’s your first house, second, or third, mortgage rules and types are always shifting and changing. It can be difficult to not only keep up with everything, but make the right choice too. Remember, a mortgage is with you for a long time, and making the wrong choice means you’re stuck with it until it expires.
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You could liken choosing a mortgage to a major investment, but the difference is you can’t bail and run, you need to see it through, either by paying it off, or re-mortgaging your house once more.
For this reason, more and more people are making the good choice to seek out help from n Edinburgh mortgage broker, before making their final choice. This means you can be sure you’ve made a sound decision, and that you have all the relevant and up to date information to hand, as well as many other benefits.
Edinburgh Mortgage Basics
If you’ve never had a mortgage before, and this is your very first chance to buy property, then the whole idea can be exciting and terrifying in equal measures. Anything financially-related needs to be thought about once, twice, three times over, and it’s always the best idea to get advice from a professional mortgage advisor.
A mortgage is of course a borderline loan/investment, and it means you are borrowing cash to buy your house, and you then pay it back monthly at a certain rate. The repayments are likely to go on for some time, much longer than a regular loan, usually over the 20 years mark, and once that is complete, you own your house completely. If you fail to make repayments, your home is at risk.
That very statement alone should make you understand the severity of the agreement you’re getting in to, and why you should always consult and expert to ensure that the agreement you’re thinking about signing is a good one for you.
Of course, there are many different types of mortgages, and one size never fits all. How can you be sure you’re getting the best deal if you haven’t shopped around? How can you be sure that the deal you’ve found is the right one? The only way to be sure is to have everything checked out by an advisor, who will be able to advise you on the right way forward, and give you their honest, unbiased opinion.
It is vital that you use a truly unbiased and independent Edinburgh mortgage advisor when seeking advice as this ensures that you get the best deal for YOU and not the broker. Too often people end up going with mortgage brokers who are tied to certain lenders and miss out on much better deals that are available elsewhere. Always make sure your advisor is independent and 'whole of market'.
Probably best to avoid your bank
For most people, especially first time buyers, when they decide to buy a house, they go to their bank and inform them of their intention. From there, the bank will give them a deal and they simply take that deal, because this is their regular bank, surely they will give you the best agreement out there?
That is almost always not the case. There are dozens of other banks, there are other lenders, there are other choices, and you cannot make a good and sound decision until you have explored you options and exhausted them.
At any one time there can be north of 15,000 different mortgage products available. Knowing this, what do you think the chances are that your bank are going to have the best deal of them all?
It is this simple - the wrong type of mortgage could cause you to pay thousands, sometimes tens of thousands, more pounds than you really needed to over the course of your mortgage agreement. Now, couldn’t you put that money to better use? Of course!
How an Edinburgh mortgage advisor can help you
Understanding the Edinburgh mortgage market is the key to making good decisions, but this is a market which is always shifting and changing, with small details making a huge difference to those looking to buy what is perhaps their first house. In addition, we’re talking about a very competitive market, and with so many choices out there, making the right one has never been more difficult than it is now.
There are many different mortgage lenders out there, not just banks, and some of them offer some fantastic rates for you to take advantage of. Some are not so great. Before you make your final choice, it is always the best option to seek financial advice from an independent Edinburgh financial advisor, who will be able to let you know whether the shortlist you have is actually a good shortlist or not.
When choosing a mortgage, you need to do the following:
- Look into the mortgage amount you can realistically afford
- Work out how many repayments you can also realistically afford
- Take into account any circumstances which aren’t in place yet, but may be in the future, e.g. loss of job, or perhaps a promotion
- Take into account any other repayments you need to make, e.g. debts, and ensure those are taken care of at the same time, weighed up against the mortgage options you’re looking at
Working out your expenses is easy enough, but you do need to look into the future a little and ensure that any circumstances that do occur would still ensure you could pay your mortgage.
Remember, if you don’t keep up your repayments, your home is at stake. That means that any decision you do make needs to be the right one, and the safest one. Of course, finding a good deal is also very important, but it needs to be a deal that doesn’t just look good on paper.
So, what would an Edinburgh mortgage broker do for you in this case?
He or she would look at your overall financial situation and then would tell you without bias whether you truly can afford a mortgage or not.
If you can’t afford one, you will know about it there and then. If you can afford it, you will be informed what kind of mortgage is most affordable for you, and you will also be given advice on the best types to avoid, based on your particular financial and personal circumstances.
Remember, there are many Edinburgh mortgage brokers and lenders out there, and they are all vying for your custom. Some of the less reputable ones might offer you a fantastic deal on paper, but the terms and conditions might totally contradict the offer you received.
Unless you’re a legal expert and you can look through those terms and conditions with a fine tooth comb, taking everything on board, you are possibly putting yourself at risk of not only losing your home, but ending up in a large amount of debt too. It’s simply not worth making a snap decision for, and therefore paying a little for advice is going to save you heaps in the future.
Once you have the information on whether you truly can afford the mortgage or not, your advisor will be able to sit and go through your options with you, giving you the pros and cons for each.
A good mortgage advisor might also have contacts within the mortgage lending world, i.e. ideas on the best deals and contacts to access them. You will have a few choices before you, and a discussion will then take place on which one to go with.
Of course, it’s all so easy to become caught up in the excitement of buying a new home, especially if it is your first one, that you’ll simply agree to anything they say, just to get the cash to live your dream. Remember you need to be cautious and you need to second guess everything.
Your dream is in sight, of course it is, but you need to be very careful about any piece of paper you sign. That excitement has led many people down the wrong path in the past, don’t be one of them. Listen to your advisor.
Your mortgage advisor will help you complete the mortgage paperwork, which can be a time consuming and arduous task if you haven’t done it before. This also means that your mortgage application is more likely to be done faster, because you’re not missing details and having to go back and correct an omission or mistake.
Details and jargon
The financial world in any guise is packed with jargon and terms which is difficult to understand if you’ve never dealt with it before. This is why so many people fall foul of incorrect deals - because they didn’t really understand the terms and conditions and the words contained with it. So, within all of that jargon, what should you really be looking for when searching for a good mortgage deal?
- Interest Rate - Of course, this is the first thing you will look at, and you’ll see shortly that it shouldn’t be the only thing you look at! A good interest rate is the first clue that you might be onto a winning deal, but never simply jump because of this fact. You also need to look into how often the interest is charged to the mortgage, is it daily, monthly, or it is per year?
- Annual Percentage Rate of Charge (APRC) - This is a percentage charge which uses the interest rate and mortgage fees to calculate the amount paid annually for this charge
- Deposit - This is the amount you put down on the house at the start, and the lump sum from the mortgage will pay for this. The more you pay for the deposit, the lower interest rate of your overall mortgage. Conversely, the less you pay as a deposit, the higher your interest rate.
- Standard Rate - This is the rate your mortgage will switch to once the fixed rate deal amount has finished
- Payment Flexibility - Are you able to pay a bit more off your mortgage on an ad hoc basis if you want to, and will there be a penalty charge for this? Can you take a repayment holiday at any point in the term? Are you able to switch from fixed to variable rate deal at any point?
As you can see, this can make finding a deal difficult for first timers, and even those who have been down the mortgage road before. Independent mortgage advice will be able to remove this worry for you and give you peace of mind.
Different types of Edinburgh mortgages available
Another complication in the mortgage world is that there isn’t simply one type of mortgage to go for and that’s that, there are several!
The one which suits you depends entirely on your circumstances, both financially and personally, and it is important to get the right one at this stage, to avoid problems in the future. Once more, knowing the types inside out is impossible for the general person, but a mortgage broker has this knowledge as standard.
Let’s briefly explore each one;
- Repayment Mortgages - This is the basic type of mortgage, and as the name would suggest, you pay back some of the interest and some the bulk amount every month. These usually last for around 25 years, and at the end, the house is yours.
- Interest-only Mortgages - In this case, you pay off the interest borrowed first, with monthly repayments, and after that you need to find the money to pay back the capital owed, in a lump sum. Repayments are lower with this type of arrangement, but you need to be sure that you can repay the capital borrowed when the interest is paid.
- Fixed Rate Mortgages - As the name suggests, the amount you pay back every month with this type of mortgage is fixed and you pay on a set date monthly. It doesn’t matter what happens to interest rates, your amount remains the same. This type of mortgage usually lasts from either 2 to 10 years.
- Variable Rate Mortgages - The amount you pay back every month depends on the SVR (standard variable rate) of the lender. As interest fluctuates, so does your repayment amount. If you think the rate of mortgages is likely to go down, this is a good deal, but remember the volatility of the market overall.
- Tracker Mortgages - This type of mortgage has an interest rate which moves in sync with the base rate of the Bank of England. Again, if the rate goes down, you benefit because you pay less, but if it goes up, you pay more.
- Discount Rate Mortgages - Again, the amount you pay every month changes with this type of mortgage, although this type does tend to offer low amounts generally. A discount rate mortgage offers a discount on the SVR and generally lasts for between 2-5 years.
- Capped Rate Mortgages - This type is the same as a variable rate mortgage, but there is a cap on the interest rate, so it can’t go above that amount. This is good for those who want the peace of mind to know that their rate is never going to skyrocket.
- Cash-back Mortgages - When you take out this type of loan, the lender will usually give you a percentage of the amount in a lump sum. This is really designed to grab you’re a attention and it’s likely that you will pay back more interest as a result. If you’re in need of a lump sum cash injection however, this could be an option.
- Offset Mortgages - If you have savings, this is a good option for you, as they combine your savings and the mortgage into one arrangement. Your interest rate per month will be calculated on both.
- 95% Mortgages - For those who are finding it hard to save up for the deposit on a house, this is an option, however because you are paying a very small amount in deposit, you are likely to end up paying more over time and you are playing a risky game with interest rates.
- Flexible Mortgages - There is a large amount of flexibility with repayments on this type of mortgage, i.e. you can pay more back at any point without penalty, and there is the option to take payment holiday, which is ideal if you are going through a time when cash is a little lower, e.g. holiday time. The rate on this type of mortgage however is higher.
- Buy to Let Mortgages - This type of mortgage is for those who want to buy a property and then let it out, effectively receiving income every month from their tenant’s rent payments. In this case, the borrowing amount takes into account the rent amount you’re likely to get too.
With such a large amount of different mortgages on the market, an Edinburgh mortgage broker really is the only option in terms of making the right choice.
Every single one of those mortgages has a set of pros and cons, and they are not suitable for everyone. For instance, the mortgages with flexibility of payments might look great on paper, because you aren’t stuck if you suddenly have a low income month or two, but the rate you pay will be much higher to offset that benefit. Having said that, this benefit might be enough for one person to accept the higher cost.
The only way to identify the best type of mortgage for you is to sit down and discuss it with an independent mortgage advisor. The sheer number of different types of means that you really need to grab as much benefit out of the one you choose as possible.
You’re tied into this arrangement for at least a few years, and in the case of a repayment mortgage, around 25 years. That’s a long time to be stuck with a deal that just doesn’t quite work for you. It is entirely possible to win out on your mortgage deal, i.e. allow it to give you more than you pay back, with benefits that suit your lifestyle and your financial needs.
However, the only way to pinpoint those benefits is with an impartial discussion. A mortgage broker or lending company, or even bank, is not going to give you advice that is totally impartial, because at the end of the day, they want you to sign on the dotted line with them, over their competition.
If you’re in Edinburgh or the surrounding areas and you’re struggling two make sense of the mortgage world, don’t stress over it for a second longer. The confusion will be much less if you can talk it out and get the right advice, giving you peace of mind that the huge investment you’re about to sign your name to, is not going to be detrimental at any point in the future.
Of course, buying a house, no matter how many times you’ve done it before, should be a joyous thing, so take the confusion of it as much as possible! Give us a call today and let us help you.