Buying a property is a big deal. It may well be the single largest purchase you ever make and it can have a huge impact on your long-term finances. Given the significance of these transactions, it’s no surprise that many people seek assistance from financial advisors.
Qualified individuals who have been trained by firms such as Simply Academy are perfectly placed to provide information and guidance.
If you’re planning to speak to an advisor, you might be interested in recent changes made as part of the Mortgage Market Review (MMR). This was a comprehensive re-evaluationof the mortgage market and most of the alterations came into effect on 26th April 2014.
The purpose of the review was to improve the process of mortgage lending to prevent people from taking on home loans they could not afford.
What advisors must tell you
Advisors must now tell you about their charges and the range of mortgages they offer, and this information has to be provided in their first meeting with you. If you’re taking a loan out online or by post, they must provide you with the information in writing before you select the deal you want.
This means you’ll know if there are limits on the types of mortgage they can recommend or if they only deal with products from particular lenders, for example.
In terms of price, advisors have to say whether they are charging a flat rate for their service, an hourly rate, a percentage of the amount you borrow or if they take a commission payment from the mortgage lender.
Bear in mind that the lender or advisor’s fee can be added to the mortgage, but you have to agree to this first.
Getting a mortgage without advice
Under certain circumstances, lenders may allow you to apply for a mortgage without taking advice. This can be done online or by post with an application form. However, to do this, you’ll need to know the details of the home loan you want.
Among the specifics you’ll have to provide are the lender’s name, the interest rate, the interest rate type (i.e. whether it’s a variable or a fixed product), the length of the mortgage term, the value of the property you wish to buy, the amount you want to borrow and whether you’re after an interest-only or a repayment mortgage.
You may be eligible to ask a lender or advisor to arrange your chosen loan without giving you any advice if you are a mortgage professional with a good understanding of the issues and risks involved or if you are remortgaging a home to raise money for business purposes. You may also qualify if you are deemed to be a ‘high net worth individual’, meaning your annual income exceeds £300,000 or you have assets worth over £3 million.
If you decide to go ahead and get a mortgage without advice, your lender or advisor must tell you in writing or in conversation about the legal protection you will lose.