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When you’re buying your first home, there can be a lot to think about. You need to consider issues such as the impact of charges and which type of mortgage would be right for you. According to a recent study, published in FT Adviser, less than one-fifth of first-time buyers worked with a broker in March 2020 prior to the pandemic. However, only one year later this number had jumped to around one-half. When you’re taking your first step onto the property ladder, speaking to a professional can help you in a variety of ways. Read on to find out why working with a broker is essential if you want to secure a mortgage.
Brokers have access to a larger variety of products
Thanks to the internet, it’s easier than ever to compare mortgages and for this reason, you might be tempted to look for yourself. However, one notable benefit of working with a broker is that they usually have access to a greater variety of products that aren’t available to customers directly. Many brokers can access products reserved exclusively for intermediaries that you wouldn’t be able to find on your local high street. These could offer preferential terms. The more options you have at your disposal, the more likely you are to find a product that suits your requirements. Working with a broker can help to give you peace of mind to know that you’re getting the best mortgage for you, helping you to rest easy.
A broker can help you to find the most suitable mortgage
With so many different mortgage products available, it can sometimes be hard to decide which one you need. This is where a professional can help. When you work with a broker, they can help you to make an informed decision by explaining the pros and cons of each product. This can make the process much simpler and easier. For example, they can help you to decide whether you prefer a fixed-rate or variable-rate mortgage. One of the main benefits of the former is that the interest rate will remain unchanged throughout the period of the fixed rate, which can help to make budgeting easier. However, there are drawbacks, such as the possibility of high early repayment charges if you want to overpay. On the other hand, with a variable mortgage rate, the interest can change. This means that if interest rates fall, you’ll typically benefit from lower monthly repayments. Furthermore, a broker will also take into account things that you may not have considered, such as the impact of fees. It can be an easy mistake to assume that the mortgage with the lowest interest rate will be the cheapest one, but this isn’t always the case. A broker can crunch the numbers on your behalf to ensure that you aren’t paying more than you have to. They can then search the market to find the deal (and the lender) that’s most appropriate for your specific circumstances.
A broker can help you if you ever want to remortgage
Typically, most people change their mortgage arrangements several times during its full term. This is also more likely if you have a so-called “marathon” mortgage of 30 years or more. One of the benefits of working with a broker is that you develop a professional relationship that can last for many years. In that time, they can regularly review your mortgage arrangements and see if there is an alternative that could help you to save money. Once you’ve reached the end of a fixed-rate period, many lenders will automatically move you to their standard variable rate (SVR). According to data from price comparison site Which?, in 2019 the average SVR was 4.9% while the average two-year fixed-rate interest rate cost just 2.52%. To put this into perspective, let’s assume you have a £150,000 repayment mortgage with 15 years remaining and were paying 2.52% interest on it. According to the Which? repayment calculator, this would cost you £1,002 per month. However, if you were then moved to the SVR with the higher rate of 4.9% per month, your monthly repayments would increase to £1,178. This means that on a yearly basis, staying on the SVR would cost you more than £2,100. Even if your lender gives you a new offer, you can’t be sure that it’s the best rate available. Working with a broker can ensure that if you aren’t paying more than you have to when the time comes to remortgage.
Get in touch
If you want to know more about how working with a broker can help you, get in touch. Email us at office@verve-financial.com or call 0330 320 5048.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
