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A broker can prove invaluable for navigating tricky waters of mortgages. Financially a good broker carries clout too. It’s a good idea to approach the big broker names and see what they have to offer as they can get better rates through bulk purchasing power, far more than the individual or small broker.
It’s also worth noting that if you stroll in off the street into a high street bank you may well end up talking to an adviser who is not fully versed in all the nuances of self-certificate mortgages. If you are then turned down the refusal may go against you for future applications.
This process is currently being regulated but until then, a broker will avoid you getting caught up with bank bureaucracy. Most brokers charge a small fee, around 250, but many will refund this when the mortgage goes through as they receive a procuration fee of around 0.3%. “We don’t feel that charging a fee is unreasonable, it’s certainly worth it in the long run if you get a mortgage that’s tailor made to your needs,” says Andrew Frankish, director of Mortgage Talk.
Fixed rates are obviously attractive to a business that doesn’t want to mess with variables in the early stages of growth. Rates are currently at a historically low level and, while no-one can predict exactly what will happen over the next few years, it is likely that at some point they will start to rise again. At UCB Home Loans the proportion of fixed rate applications recently increased to its current level of around 40%.
Fixed rates may not suit those with gambling tendencies. There is a current debate about the single EU currency. EU base rate being 2.75, with UK rates around 4, joining the EU rates might make a fixed rate unadvisable. Conversely the UK rate is actually lower than it first appears as banks in the UK make less of a margin than typical EU counterparts. “It very much depends on the borrower and their own risk assessment but risks are certainly enhanced with large sums of money,” says Bitner.
Foreign currency mortgages were very popular in the early nineties but after a lot of lenders’ harsh experiences with the yen, they are now offered less and less. Other factors in their demise include good domestic rates, a very limited range of product, and hefty redemption fees. “This is a specialised market demanding a greater degree of understanding of the potential risks faced by the borrower, and our Channel Islands operation is capable of providing this service,” says Kunle Olafare of KBFS.
Interest only mortgages are becoming increasingly popular, and are ideal for those expecting that big bonus or are looking to sell on their company in the future. “It’s certainly a way of reducing cash flow, but you have to appreciate that this is only delaying the time to pay back. You need to look at your aspirations and plans and make provision for all eventualities, even the bad ones,” says Simon Jones, associate director of Savills Private Finance.
For full details on the best mortgage deals check out Mortgage advisor and homebuyer at www.homebuyermag.co.uk
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