Are you looking to get onto the property ladder? Buying your first home can be very daunting. You have to research to find the perfect house for you as well as choose the best mortgage lenders in the UK.
A lot of mortgage providers are out there. Although they all claim to have been providing mortgages at lower interest rates, getting the best deal is quite challenging. Interest rates depend on multiple factors, such as your credit score and financial condition.
If your overall financial situation is strong, you will certainly get the best deal on your mortgage. Before you start looking for the best mortgage lenders in the UK, you should look at your credit score and see if you can actually afford to borrow such a large sum.
Your credit score must be good. Otherwise, you cannot claim for lower interest rates despite putting down 20% or more of the purchase price as a deposit. If you spot any discrepancies, make sure you get them fixed before officially putting in the loan application.
How to choose the right mortgage lender for your home purchase in the UK
Finding the best mortgage lenders in the UK cannot be difficult if you follow the following tips:
- Start your research work six months before
Once you have decided to buy a house, you should start your research work as soon as possible. Most of the people start finding a lender when they have to get a mortgage in principle, but that is too late. Being proactive will help you better understand the market reputation of your mortgage lender.
Advanced research cannot help you know the exact interest rates you will be charged because the estimation is given based on your financial condition. This is what you get in a mortgage, in principle.
With the help of research, you can compare interest rates and fees and find whether other buyers are satisfied with their product and service. You can read reviews on Google, lenders’ websites and social media websites.
- Watch out for the registration licence
This is the most important thing for a mortgage lender to be able to provide you with a mortgage deal. A mortgage lender should be registered with the FCA. Any lender selling mortgages without the registration number could be a scam and trap you into the worst deal. Make sure you carefully check these details.
Go to the website of a lender and check if they have mentioned the registration number. Such details can be found below the fold. Another way to check the authenticity of a lender is to go to the FCA website and type the lender’s name, and you will find the registration details if registered. Never ever take out a mortgage from an unregistered lender because, in case of any issues, you will not be able to report it to the FCA.
- The lender’s customer service
You should check the customer service of a mortgage lender. A mortgage is the largest debt, and you will face several occasions to contact your mortgage provider.
For instance, you might want to contact them to refinance your mortgage, change your repayment plan in case of financial difficulties, find a way to pay a few instalments a few months before and the like.
Of course, you would like to ensure that the customer service is top-notch. Proof is in the pudding, so contact the customer service department and find out if they effectively answer your queries.
Find out how long they take to answer your calls and whether they have complete knowledge to answer your questions. Find out what other people say about their customer service. Check Google reviews and social networking sites.
- Take the help of a mortgage broker
Finding the best mortgage lenders in the UK is not a cinch. Despite a lot of research work, you can find it very complicated to find the best deal. Therefore, you should consult a mortgage broker.
When you choose a mortgage broker, you do not need to embroil yourself in the research work, as your broker will assess your application and then introduce you to a panel of lenders whose eligibility criteria you match.
Make sure the broker you choose is a whole-of-market broker. Some mortgage brokers only offer mortgages from a selected panel of lenders.
Whole-of-market brokers are in touch with all kinds of mortgage lenders, so you will have a higher chance of getting the best deal.
Be careful of mortgage broker fees and commissions. Some brokers charge nothing from the mortgage buyers, while others charge. Try to choose a broker that charges very little fees or charge nothing at all.
Here are the key factors to consider when selecting the best mortgage lender for your needs:
- Research and Compare: Start by doing your research. There are various types of mortgage lenders in the UK, including traditional banks, building societies, credit unions, and online lenders. Compare their offerings, interest rates, and terms.
- Interest Rates: Pay close attention to the interest rates they offer. Fixed-rate mortgages provide stable monthly payments, while variable-rate mortgages can offer lower initial rates but come with the risk of increasing payments over time.
- Fees and Charges: In addition to interest rates, consider the fees and charges associated with the mortgage, including arrangement fees, valuation fees, and early repayment charges. These can significantly affect the overall cost of your mortgage.
- Loan Types: Choose a lender that offers the type of mortgage that suits your needs. Common options include fixed-rate mortgages, tracker mortgages, and offset mortgages. Your lender should be able to explain these options in detail.
- Customer Service: Look for a lender with a good reputation for customer service. Read reviews and ask for recommendations from friends or family who have had experience with the lender.
- Accessibility: Consider how easy it is to access your lender. Traditional banks and building societies often have physical branches, while online lenders may provide 24/7 online support.
- Lender’s Track Record: Check the lender’s track record in the market. A lender with a long history of financial stability is usually a safer choice.
- Mortgage Terms: Understand the terms and conditions of the mortgage. Make sure you’re comfortable with the length of the mortgage (e.g., 15, 20, or 30 years) and the repayment schedule.
- Pre-Approval: Many lenders offer pre-approval, which can give you an idea of how much you can borrow and help you in your house-hunting process. Consider a lender that offers this service.
- Repayment Options: Different lenders may offer various repayment options, such as interest-only or capital and interest (repaying both interest and principal). Choose the one that suits your financial situation and goals.
- Flexibility: Look for a lender that offers flexibility in case your financial circumstances change. For example, some lenders allow overpayments without penalties, which can help you pay off your mortgage faster.
- Mortgage Broker: Consider working with a mortgage broker. Brokers have access to a wide range of lenders and can help you find the best deal based on your unique situation.
- Regulations and Compliance: Ensure that the lender complies with all the necessary regulations and provides you with transparent information regarding the mortgage terms.
- Rate Lock Policy: In a market with fluctuating interest rates, find out if the lender offers a rate lock policy that protects you from rate increases between application and closing.
- Online Tools and Resources: Some lenders provide useful online tools and calculators that can help you understand your mortgage options and budget better.
The final word
You may find it arduous to choose the best mortgage lender, but it is not impossible at all. Do extensive research before you apply for it. The best way is to get a mortgage through a mortgage broker.
Remember that the best mortgage lender for you may not be the same as someone else’s. It depends on your individual financial situation and preferences. Take your time to research and compare different lenders to find the one that best suits your needs and offers favorable terms for your home purchase.
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