Big lenders are looking for 'vanilla customers' to give mortgages to, people who have big deposits, no missed payments and very high credit scores. If a customer can't fit those criteria then there are other lenders who can to help. Fortunately there are mortgage options available off the high street for some of those who no longer fit the rigid mould most lenders require. Specialist lenders use underwriters to investigate each application, meanning they get to truly understand your position, unlike the larger lenders where the process can be far more automated and anonymous. These lenders predominately accept new business via brokers only, so your route to them is via us. We have access to lenders offering adverse credit and self employed mortgages.
Applying for a credit card or loan is pretty straightforward, but when it comes to borrowing money to buy a house - the biggest purchase you are ever likely to make - the process becomes more complicated and is made more difficult if your circumstances are more complex, for instance if you are self employed or have adverse credit history.
The first thing to think about is how much you can afford to borrow. A mortgage broker will be able to help you with this. Lenders will look at your overall ability to afford a mortgage and will take your debts, spending habits and other financial commitments into consideration. The other big decision you need to make early on is whether you want the security of a fixed rate mortgage or a tracker deal where the interest will potentially rise or fall in line with Bank of England base rates.
There are pros and cons with both options and you can speak to a mortgage broker about which one is right for you. The initial term you opt for will also need to be considered at this stage and should be based on your future plans and your expectations of your future finances.
In the past, many lenders allowed borrowers to pay just the interest on their loans with the capital repaid at a later date - once the house had been sold for example. However, this option is now rarely on offer and is generally advised against basically because if house prices fall, you could be stuck in negative equity.
When comparing the best mortgage deals it is so important to look beyond the headline rate and take all fees into consideration. These include arrangement and application fees, valuation and legal costs, the early repayment charge and any exit fee. A mortgage broker will compare these costs for you. Just looking at the headline rate doesn't give you the full picture of how much a loan will cost you and some lenders offer lower rates in exchange for a higher fee and vice versa.
Finally, you will need a deposit in order to qualify for a mortgage. Generally speaking, the bigger the deposit, the better rate you can expect to be offered. If you're a first-time buyer there are also Government schemes to help you take your first steps onto the ladder. You can find out more about these and everything else you need to know about by contacting a specialist mortgage advisor.