What does a mortgage broker do that you can’t? And why should you pay for
their services when there are already loads of other costs when moving home or
If you’re asking yourself these questions, you might be tempted to ‘cut out the
middleman’ and arrange your own mortgage. However, you may want to think
Mortgage advice from an experienced, reputable broker can prove invaluable.
1. A mortgage broker is qualified
There’s a lot to think about when choosing the right mortgage and mistakes can
be expensive in the long run. It’s not as simple as just picking the cheapest fixed-
rate or tracker mortgage you can find.
Mortgage brokers have to be qualified to give you mortgage advice; you may not
get that kind of guarantee if you ring up a lender’s call centre. That said, new
regulations mean that all call centre staff need to be advisers or must refer you
to someone who is, and if you go in-branch, you’ll be able to arrange an
appointment with one of their mortgage advisers.
2. A broker is on your side
An independent mortgage broker will look for the best mortgage for you. They
aren’t on the lender’s side, they’re on yours. They will also be able to give you
access to far more products than if you went direct to a provider.
You’ll get unbiased advice and be able to choose from a range of lenders and
subsequent products, rather than being restricted to the single range of one
lender. Furthermore, an independent broker not tied to one estate agent is
firmly on your side.
3. They know the industry
Lending criteria have tightened massively over the last few years, with the
Mortgage Market Review being the latest, and arguably widest-ranging,
development. It’s been designed to ensure borrowers can prove affordability,
even in the event of a rate rise, and those extra checks have understandably
increased application times.
That’s why it’s so important to stay in the loop and to have a mortgage broker on
your side who understands it all. A broker deals with lenders on a day-to-day
basis, so they’ll know what the application process is like for each product and
can tell you which lender can process your application with minimal delays.
They also know the background criteria that a lender has and can bring this
experience to bear when advising you and processing your application.
Then there’s the fact that, because a mortgage broker may direct a lot of
business to a particular lender in a year, they can exert influence and chase
things in a way you just can’t do by yourself. That can make a huge difference
should things get held up.
4. It’s not just about the mortgage
A mortgage broker won’t just advise you about your mortgage. They will also
look at any related requirements, such as life insurance, payment protection and
even buildings and contents insurance.
They will recommend appropriate insurance for your new mortgage
arrangements to make sure you and your loved ones are fully protected in the
- Critical illness (such as cancer, heart attack or stroke)
5. Don’t be put off by a fee
Mortgage advice tailored to your circumstances is a service. In order for the
mortgage broker to be able to offer this service, they need to make money.
They do this by one or both of the following:
- Charging a fee. This could be a one-off fee for advice or a fee that pays for
advice throughout the term of your mortgage (if you need to remortgage,
move home, etc.).
- Commission. Lenders and insurers may decide to pay the mortgage
broker commission for putting your business their way.
Where can you find out how much your mortgage broker makes?
Mortgage brokers are required to provide you with a Key Facts document about
their services that details any fees or commission they charge or earn.
You will also be provided with a Key Facts Illustration (KFI) about the specific
mortgage being recommended. Details of your broker’s fees can be found in
section 8 of the KFI.
Details of any commission earned by your broker for introducing your business
to the mortgage lender can be found in section 13 of the KFI.
6. The value of advice
Mortgages are a lot more difficult than they first appear. Knowing what rate,
term, lender, features and insurance to get are all time-consuming and complex
Comparing mortgages on a site like www.moneyfacts.co.uk is a good place to
start – it will give you an idea of what’s out there. But choosing a mortgage is a
process far more complicated than simply opting for the lowest rate or the best
A mortgage broker takes into account your whole circumstances before
recommending a suitable product It’s that thorough, professional analysis that
makes a broker’s advice well worth paying for.
For more information, call BB Mortgages on Newark 01636 674455 or email
If you’re involved in a business partnership or you’re a director of a limited company, have you ever considered what would happen to your shares if you die?It’s probably time you did.
The fact is, unless you take steps now, your next of kin could end up having to take your place in the business, if your business partners can’t raise the funds to buy your shares.
Now in some cases that might be desirable, but in most cases it wouldn’t be.
A life insurance policy can solve this issue. A policy can be put in place for the value of your shares which, should you die, would make funds available for your business partners to buy your shares from your next of kin.
And here’s another thing to consider. If you’re a company director, you can arrange your personal life insurance in such a way that the premiums are paid by the company. The benefit of this is that if you are a higher-rate tax payer, a £100 per month premium actually costs you £140, but, under current regulations, paying it from your limited company means you get relief for the premium against your corporation tax. In effect, this only costs £80 per month and the sum assured is paid out to your next of kin.
For a more detailed discussion about shareholder protection or other aspects of insurance in your business, please get in touch with James from BB Mortgages on 01636 674455 or firstname.lastname@example.org
Buy-to-let mortgages have been in the news a lot lately. Seen by many landlords in the last few years as a great investment opportunity.
Recent changes to buy-to-let tax relief have now left a number of individual landlords wondering whether it’s worth it. Yet renting still remains an attractive option for some house-hunters, and buy-to-let can still be a sensible investment opportunity for landlords.
Limited companies are not affected by the changes to mortgage interest tax relief, and many landlords are now setting up limited companies to own the properties they rent out. So, is this a good idea?
Yes … and no. It really depends on your personal circumstances. Let’s look at some of the main pros and cons:
- Higher tax relief – under current legislation, limited companies will pay less tax than individual landlords
- Dividends – you can potentially take up to £5,000 as tax-free dividend income
- No income tax when investing profits to acquire further properties – corporation tax is about half the higher income tax rate
- Personal funds can be drawn back out of the company – for example, mortgage deposits could be drawn back by way of a director’s loan
- No Capital Gains Tax allowance on sales – individuals can benefit from a Capital Gains Tax allowance (currently £11,100) when they sell a property
- Additional costs – running a limited company incurs extra costs, such as accounts preparation and filing
- Higher mortgage rates – many lenders charge companies more than they charge individual borrowers
- Less choice – fewer lenders offer mortgages to companies
Transferring existing properties from individual ownership to a limited company can be complex and costly; but it can be done.
Much depends on your current circumstances and your future ambitions. The best thing to do – as with any mortgage issue – is to seek professional advice.
BB Mortgages provides specialist buy-to-let mortgage advice to landlords. For advice, call us on Newark 01636 674455
A. Interest rates and mortgages have been in the news a lot recently. The Bank of England has reduced interest rates to a record low of 0.25%, and even hinted at the possibility of a further cut. So, is this a good time to fix for longer than the usual two years?
Historically, two year fixed rates were the norm, but five years is now more common and some lenders are launching seven and even 10year fixed deals, with attractive rates.
If you are in a stable situation relationship, job, house then a longer term fixed rate does make sense. But you wouldn’t want to break a 10year fixed rate and incur an early repayment charge, as this would be costly (although you can transfer the mortgage to a new house if you sell).
Over the past six months, 91% of our clients have opted for a fixed rate mortgage, most on two year terms. It’s worth bearing in mind that when you come to review your two year fixed rate, may be around the time that the UK is actually leaving the EU.
Nobody knows what impact that will have on the economy and interest rates, and that’s why some people may prefer to choose a longer term fixed rate, and enjoy the peace of mind that comes with it.
If you’re buying a home with a smaller deposit, it may be worth considering a short term fixed rate. As your equity grows (known as the loan to value or LTV) the lender’s risk profile reduces, and they will generally offer you cheaper rates. So, even if interest rates increase, you can offset this by securing a lower rate, reflecting that reduced risk.
If you feel five years is too short, but 10 years is too long, there is now another option. So far, 32 seven year fixed rate products have been launched (compared to only a handful five years ago) and these are a good middle ground.
The other solution, of course, is a tracker or variable mortgage, which may follow the Bank of England base rate. But, although interest rates could fall again, they could also increase as we approach the EU departure date. Be mindful that rates could go up or down. Much depends on your circumstances and attitude to risk. The best course of action is to seek independent advice.
BB Mortgages helps scores of self-employed people find a mortgage each year. For advice, call us on Newark 01636 674455
A. The answer to this question is most definitely yes. But (and you knew there was a but coming, didn’t you?) lenders are a little stricter with self-employed applications. It frustrates me when I hear that lenders haven’t been helpful to a self-employed applicant; something which is often mentioned in the media. Like anything in life, it helps to be armed with some knowledge.
Some key points to note for self-employed mortgage applicants are:
- You must have your documents in order. The majority of lenders will require your tax calculation (also known as an ‘SA302’) for the last three years. This can be ordered from your accountant, HM Revenue and Customs or from the HMRC website. In short, this is a summary of your self-employed income, net profit or dividends and salary, if you are a limited company
- Most lenders will then take an average of the last two years’ income. However, some lenders will take the most recent year’s income and others have individual ways of looking at your income
- There are some lenders in the market that will accept you if you have only been self-employed for one year, instead of the usual two or three years
If you are self-employed, the most important thing to do is talk to a mortgage broker before you find a property. They will help you fully understand what paperwork is required and how different lenders will assess your income. That will give you an idea of what’s achievable.
So, the good news is that there are lots of mortgage options out there for home-movers, people looking to remortgage, first-time buyers and investors. It just requires good knowledge of each lender’s self-employed criteria and a little patience to negotiate the lender’s underwriting procedures.
I hope this helpful to anyone who is self-employed and looking for a mortgage.
BB Mortgages helps scores of self-employed people find a mortgage each year. For advice, call us on Newark 01636 674455
“Just surf the net” or “go to the bank” your friends or colleagues might suggest when looking for your first mortgage or a better deal on your current one. However, when we arrange your mortgage you can rest assured that not only will we find you the best one on offer for your circumstances but also one that suits you in the future as well as providing straightforward advice on the best insurance to protect your home and family.
Advice from a trusted local broker such as BB Mortgages will make everything run as smoothly as possible. We will always give you qualified advice that takes into account all your circumstances, which is something a price comparison website can never do.
We’re on your side and, with our market knowledge, we deal with a range of lenders making us ideally placed locally to find you the deal which fits you best; including offers that are not always available to the public. We also keep the process moving for you to ensure your timescales are met saving you precious time as we will administer the whole application.
And if you’re still not convinced…
Peace of mind because we have a legal duty of care to our clients when we provide advice. This means that if our advice turns out to be incorrect, you can complain and be compensated.