Whether it’s your first time buying a property, or your tenth, every mortgage application is different, particularly if your circumstances have changed since you last applied for a mortgage. Asking your mortgage broker the right questions will help you to get all the relevant information you need to decide which is the best mortgage deal for you. So what are the key questions to ask your mortgage adviser?
How much deposit will I need?
The amount of deposit you’ll need will depend on the property value. To give an example, if the lender provides 90% of the property value, you’d put down the remaining 10% as a deposit. Mortgage deals can vary so its important to ask your broker about the different options available to you. Factors like being self-employed, or looking at buy-to-let mortgages may mean you will need to put down a higher deposit.
What types of mortgages are available?
There are a few different ways of paying off a mortgage and brokers can advise which way would best suit your circumstances. With a repayment mortgage, you pay both a portion of the loan and the interest every month until you reach the end of the term.
Interest only mortgages are where you only pay back the interest in your monthly payments, leaving you to pay back the capital at the end of the term. Your broker will also be able to inform you about other products such as cashback, part and part, flexible or offset mortgages.
What is affordable for me?
This is where a broker can be invaluable. They will be able to sit down with you and assess your finances to advise on what you can afford to borrow comfortably. It’s important to be transparent with your broker about your outgoings – don’t be ashamed to tell them exactly how much you spend on certain things. They aren’t there to judge your spending, it’s just so they can determine what you can afford to borrow and ensure you don’t get stuck in an expensive mortgage.
A mortgage adviser can help make your application as appealing as possible to the lender. They can offer advice on how to improve your credit score, and if you’re a self-employed limited company director, can help you decide whether to approach a lender that works on your salary and dividends for affordability, or one that uses your salary and your share of the company’s net profit after tax.
What is the interest rate? Will it change over time?
Lenders often entice customers in with a cheaper ‘incentive rate’ for the first one to five years of the mortgage term. This means you’ll pay a lower interest rate until they move you onto their standard variable rate (SVR). It might look like a good deal initially but a broker will be able to comb through the fine print to help you decide if it’s an affordable long term option.
Which documents do I need to provide?
Proof of income, such as payslips and P60s or Tax Calculations and Tax Year Overviews, and proof of identity and address, such as your passport, driving license, utility bills and bank statements are the sorts of things you’ll need, but the exact requirements will vary from lender to lender. Asking what documentation you’ll need is one of the important questions to ask your mortgage adviser early on so you can start compiling it all together. Freelancers or those with a poor credit rating may need further documentation which your broker can assist with.