Mortgage brokers are intermediary agents who offer their banking expertise to broker mortgage and remortgage loans on behalf of individual property buyers or businesses. In today’s competitive market, using a mortgage broker has become beneficial, in some cases even essential, in securing a mortgage from a bank or direct lender.
It’s a tough market but it’s not impossible to get your foot on the ladder and using a mortgage broker can be a good way to do it; what they offer is a regulated financial activity, making the broker responsible for ensuring the advice is appropriate to the individual circumstances of the borrower and the size of the loan.
If you are looking for a property in Scotland, it is worth bearing in mind that mortgage requirements differ slightly in Scotland to Wales and England.
With demand developing amongst UK as well as domestic buyers for Scottish properties, particularly along the East Coast: Fife, Dundee, Aberdeen, Edinburgh and East Lothian property – it is worth thinking location-appropriately about securing your mortgage.
The following tips have been designed with Scottish properties, and therefore the appropriate regulations, in mind.
Tip One: Check the FSA register
Check your broker is authorised under the FSA register. Since 2004 it is a legal requirement to be registered with the FSA.
Tip Two: Read the IDD
Once you have chosen a mortgage broker, you will be presented with an Independent Disclosure Document (IDD). Look over this carefully. You will need to decide if all the terms are appropriate, and raise any queries with your broker now. The IDD outlines what exactly the broker can offer you, including whether they offer only their own mortgages or other mortgages available on the market. It will also say whether mortgages are offered on an ‘information only’ or ‘advice’ basis (see Tip Four). The financial details of fees and commission will also be presented here.
Tip Three: Ask questions
If there is any information not included in the IDD, ask now! You will need to know what the procedure is should you have a complaint, and you should also ask whether you will be covered by the Financial Services compensation scheme.
Tip Four: Know the jargon
‘Information only’ sales are suited to buyers who already know the type of mortgage they want and include only information about the specified mortgage. ‘Advice’ based sales put it in the hands of the broker to source a mortgage suited to your needs and circumstances. You will need to undergo checks (your broker will source appropriate documentation including payslips, bank statements etc) to ensure you will be able to make mortgage repayments.
Try to familiarise yourself with the lingo beforehand. However, if there is any terminology you are unfamiliar with throughout the process, simply ask your broker; it is important not to proceed until all points have been clarified. This will work out better both for you and for your broker and will garner the best results in securing the right mortgage for you.