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Choosing a Mortgage Broker

December 26, 2009 in Property Finance by Kez

Choosing your mortgage consultant?

The repayment of a mortgage is a “sport” of endurance. There are several strategies that can help you gain (paying less interest). A good mortgage consultant is an important asset who can help you get a good mortgage with a good mortgage strategy helping you year after year to pay off your mortgage faster without changing your standard of living.

Finding a good adviser does not have to be rocket science. It is like hiring an employee who works for you. If you plan to pay your mortgage in 15 years or 25 years, your mortgage professional will be there to help.

Here are some considerations that can help you find a good mortgage consultant.

Types of mortgage consultants

There are 2 main types of mortgage consultants who each have their strengths and weaknesses:

The representative of the bank branch offers products from a single lender, is responsible for several tasks including mortgages and is an employee with a possible annual bonus.

The mortgage broker: Offering products from several lenders, specializes in mortgages and works only on commission (paid by the lender) and some charge an additional one off fee.

Factors to consider when choosing a mortgage broker.

Choosing a mortgage broker is primarily a question of trust. There are 2 things that normally help us trust a professional:

  • Integrity Will the mortgage broker put my interests before his own and that of the lender? “The negotiation of a mortgage involves two parties who are opposed and whose interests diverge: the lender and the borrower. It is important that you are confident that the recommendations of your advisor reflect the best strategies and solutions for you.
  • Expertise: Does your mortgage broker have the ability to offer the best solutions? Your mortgage broker should be able to compare for you the various mortgage products and determine which is best for you.

The two components, integrity and expertise are necessary for trust. Here are two examples to explain this point:

A good used car salesman probably had the expertise to sell you a car, but will you trust him? It depends!

Even if your car salesman is the most honest man you know and works hard, does he the right knowledge and expertise to be able to select the best car deal for you?

Choosing

Trust is often a feeling that one has with a person. It is based on the fact that we think that this person demonstrates integrity and has some expertise. If you find the right person to be your mortgage broker, you will probably end up with a professional who will be able to advise you for many years.

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Mortgage Strategy

December 26, 2009 in Property Finance by Kez

A good mortgage strategy is the basis for significant savings: thousands and even tens of thousands of pounds in savings on a mortgage of £100,000.

Choosing the right mortgage strategy

The easy answer for choosing a good strategy is to contact a mortgage broker who specializes in creating customized mortgage strategies for the clients.

Why?

There are three good reasons:

1. Nobody knows the future of interest rates in the UK.
2. Good strategy must take into account the current economic climate and changing situation.
3. It must be customized with your goals and your personal situation.

Working with all this is not an easy job and it is better to check a mortgage professional who does this day after day.

But do not stop there.

You need to take on the more difficult task of analyzing several factors to create a mortgage plan.

In order to choose the right mortgage strategy, you need to:

know the strengths and weaknesses of the mortgage products available;
identify your current position in the cycle of interest rates, and
assess the probability of higher or lower rate for the next 10-15 years.

Cycles of interest rates.

There are basically 3 types of scenarios and 2 basic rules to understanding interest rates (all this could take several books but we’ll keep our issue at the way).

Scenario:
1. Rates are generally higher
2. The rates are generally falling
3. The rates are generally stable.

Two Rules of Interest Rates:

• Interest rates below inflation. When the index of consumer prices rising rates are increasing.
• Interest rates are linked to the economic health of UK. When the economic situation is healthy, the interest rates rise and when things go wrong rates go rates down.

Nobody knows the future of interest rates. We just need to remember that each scenario requires a particular strategy and getting it wrong can prove very costly. For example, it could be disastrous for a strategy to be linked to lower interest rates and they start rising.

A borrower may want to “stay on the safe side” and opt for a pre-determined risk strategy with a mortgage that is fixed at the same rate for say 5 years. Alternatively, someone may want to opt for fixed rate for much longer, but at times this strategy has proved costly. Choosing the right product, therefore, is crucial to saving thousands of pounds on the long run.

What are the different strategies?

There are several basic strategies, each may have several options and it is often advantageous to combine two strategies together to take advantage of the market. The most important thing is to consult a certified professional in the mortgage market.

Properly evaluating the different the strategies means a borrower can enjoy a proper mortgage planning and savings throughout the duration of a mortgage. Remember that a good mortgage strategy is significantly more important than simply negotiating the best interest rates. Each strategy deserves an explanation must and be customized and combined with your long term goals and the state of the economy today.

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