Mortgage rates have been at the top of the news agenda for weeks. September’s ‘mini-budget’ saw deals disappear and rates rise sharply, as the cost of government borrowing rose.
Since then, the market has been in a near constant state of flux. In October, two-year and five-year average fixed rates reached recent peaks of 6.65 percent and 6.51 percent, respectively, higher than they had been in several years.
Since then, average rates have been falling steadily with the five-year average now back below 6 percent, but continued lender caution and talk of falling home prices means getting the right mortgage for you are still far from simple.
Helping hand: The right broker can be a valuable advisor in guiding you through buying a home and finding the best mortgage option for you.
And that’s before considering the impact of any future increases in the Bank of England base rate.
The Monetary Policy Committee is expected to raise the rate from its current level of 3 percent when it meets on December 15, which some say could push mortgage rates up again and make buying or moving ever more difficult. unavailable.
Matt Coulson, Mortgage Advisor at Heron Financial, says: ‘There’s a big ‘wait and see’ trend right now, and it’s entirely justified given what’s been reported.
“The biggest change we’ve seen across the board is that customers are eager to understand what their options look like, but they’re not taking that forward and making a decision.”
At times like this, it may be wise to turn to a mortgage broker to help you assess your options and what you can afford. But how do you know if a broker is right for you?
We asked the experts what to look for when choosing a broker and the questions to ask before becoming their client.
How quickly can you get a mortgage offer?
A good place to start, suggests Kensington Mortgages business director Vicki Harris, is to ask your potential broker about her availability and the current expected time for the broker-recommended lender to make a formal offer.
The latter, he says, will play a key role in securing a mortgage deal at the right time.
The rapid changes in rates in recent months meant that lenders are dealing with increased demand and many are believed to have lowered rates or kept them artificially high for a period to maintain a level of service.
In a fast-moving market, it’s crucial to avoid delays at the hands of lenders and mortgage brokers.
How many lenders do you work with?
It is important to know how many lenders your broker has access to. Making sure your broker has access to “the entire market” increases your chances of getting the best deal, says Nick Mendes, John Charcol’s mortgage technical manager.
While many lenders offer broker-only rates that aren’t available if you go directly (one of the benefits of using a broker), some brokers may work only with their preferred providers, limiting your choice.
This is especially important if you have special financial circumstances, such as irregularities in your credit history.
“This is key as an increasing number of borrowers may not fit the lending criteria of major banks and therefore may need to look to some of the more specialized options on the market.” adds Harris.
Do they deal with ‘people like you?’
If you have special income or wealth circumstances, such as being self-employed or having sporadic income, it’s worth making sure your broker not only fully understands your needs, but also has experience working with others in similar situations.
“The right broker should have a consistent history of dealing with people ‘just like you,’ so it’s important to get this straight up front,” says Kevin Roberts, director of L&G Mortgage Club.
“A good starting point may be to ask a potential broker about the type of client they typically deal with.”
A Good Match: Making sure your broker has experience working with clients in similar financial situations is a key part of choosing the right person for you
However, making sure your broker takes the time to understand your circumstances and what you need from your mortgage isn’t just important if you have a different income profile.
“Getting this wrong can mean it’s a lot more expensive for the borrower,” says Harris.
‘For example, this could be in the form of trade-offs between price and speed; benefits of fixed fees versus tracking fees; choosing between a mortgage that offers higher rates or lower rates; the likelihood of having to get out of the mortgage and what the lender’s prepayment charges are.
‘All of these options should be evaluated by your mortgage broker based on your individual needs.’
What fees do you charge?
Knowing what fees your broker charges and how payment works is an important part of making sure you choose the right advisor for you. Some charge at the point of an offer, while others charge at completion.
Before you choose who to work with, getting a rate comparison can be a helpful way to determine the type of price you’ll be seeking for services.
Rates differ not only between brokers, but also based on the size of your mortgage and the complexity of your needs.
It is also important to understand what is included within those charges. For example, does the mortgage broker support you throughout the process, or is the administrative work shifted to another member of the team or department?
This is the Money L&C Mortgage Broker Partner
This is Money has a long-standing association with the London & Country mortgage broker.
L&C offers free mortgage counseling that can help people explore the right mortgage for them without having to pay any up-front costs.
Your qualified mortgage advisors can help you determine how much you can borrow, which fixed-term agreement is right for you, whether a tracker would be better, and explain all the different elements involved.
They can also advise people on which banks and building societies are likely to accept them.
Borrowers can compare home loans with our best mortgage rate calculator, based on their loan size and home value, and can start their application online or speak with a broker over the phone.
Upon successful completion of your mortgage application, the lender pays a fee to L&C and will share a small portion of the fee with This is Money. We do not allow this business relationship to affect our editorial independence.
What other services does the broker offer?
If this is your first time buying a home, the process and checklist of things to consider can be overwhelming.
It might be worth asking a potential broker what other services or products his company offers, such as insurance or advice on debt consolidation.
However, it’s important to shop around and not just accept their recommendations. They will often receive a commission for referring you to their partner firms, and you may find a better deal elsewhere.
Similarly, some offer hard credit searches that will help narrow down which lenders you are likely to be able to borrow from.
Have they worked in a difficult market?
Mortgage rates have been low for over a decade and while this has been beneficial in getting many onto the housing ladder, it means that as interest rates rise you need to make sure you are working with a rider who has experience in these conditions.
Options that would have previously been ruled out, such as starting with a tracker fee, may now be the most cost-effective option and it is beneficial to have an advisor who has experience working in these conditions.
But don’t necessarily equate longevity with the individual being the right runner for you, Mendes cautions.
Don’t forget to check their reviews.
Finally, always check the reviews of brokers or firms before proceeding.
“Ultimately, whether you’re a first-time buyer or a seasoned borrower, it’s crucial that you feel supported by your advisor,” says Roberts.
“Take the time to do your research, whether it’s through Trustpilot ratings, talking to friends, or reading testimonials online.”
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate agreement is coming to an end, or because they have agreed to purchase a home, should explore their options as soon as possible.
This is the best Money Mortgage Rate Calculator powered by L&C that can show you offers that match the value of your mortgage and property
What if I need to re-mortgage?
Borrowers should shop around and talk to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed-rate agreement ending within the next six to nine months should consider how much it would cost to remortgage now and consider closing a new agreement.
Most mortgage deals allow fees to be added to the loan and are then only charged when you withdraw. By doing this, borrowers can lock in a rate without paying expensive setup fees.
What if I am buying a house?
Those with agreed home purchases should also aim to lock in rates as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be careful not to overstretch themselves and be prepared for the possibility of house prices falling from their current high levels, due to higher mortgage rates limiting people’s borrowing capacity.
How to Compare Mortgage Costs
The best way to compare mortgage costs and find the deal that’s right for you is to talk to a good broker.
You can use our best mortgage rate calculator to display offers that match your home value, mortgage size, term, and fixed rate needs.
Keep in mind, however, that rates can change quickly, so the advice is if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .
> Consult the best fixed-rate mortgages that you could apply for
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