Need a large Mortgage, £500k+ - Then You Must Visit A Mortgage Broker
May 2006
One of the problems with some of the great mortgage deals that are advertised (including the ones in the Best Buy tables) is that many lenders refuse to offer them on loans over £250,000. But with the average price of a property in the South East being nearly £250,000 this policy seems very strange, this after all is the 2006 and not 1996 so even a property that’s worth £500k can hardly be viewed as extravagant.
Nevertheless, if you’re in the market for a mortgage above £250k and even more so if the amount is £500k then you’re strongly advised to talk to a few mortgage brokers. Not only will they have a better understanding of the current market but have access to deals which won’t be available to the general public.
Concentrate On The Total Fees Charged
Mortgage companies love to be sneaky about charging fees. Some offer cheap interest rates alongside very high charges while others offer higher interest rates while charging less on fees. There are infinite tricks that they can play.
So the only way to determine which is the best mortgage for your financial circumstances is to add up the total costs including all fees/charges and the monthly repayment of the different deals you’re offered so as to compare like with like.
Obviously on larger amounts of money fees are not as relevant as the interest rate as long as they’re not charged as a percentage. For example -
- A £1,000 arrangement fee on a loan of £500k is not nearly as severe as a £1,000 fee on £100k
- So for larger mortgages concentrate far more on the interest rate charged
- Don’t forget about flexibility because it’s vital when dealing with large sums of money
- On any large mortgage it must come with the ability to make large overpayments without any financial penalty
- The ability to early repay the mortgage in full should also be a must
Visit At Least Two Brokers
One of the worse things anyone can do in the personal finance world is take advice or buy a product from the first person you see. So when looking to buy a mortgage we’d advise mortgage buyers to visit at least two brokers, if not three. But never let them on to the fact that you’re visiting their competitors.
Whether you actually decide to do business with a broker is another matter but by visiting a number of them your knowledge and understanding of the mortgage market will increase dramatically. This can only be good news as informed buyers either get the best deals or can easily spot the (legal) scams and tricks that the finance companies are so deft at playing on the unwary.
Summary
The mortgage market is a real minefield and even more so when you’re looking to borrow £250k - £500K or more. This is why it’s imperative to be guided by a mortgage broker at least to get a better initial feel for the market. Mortgage brokers are specialists in dealing with customers looking to borrow larger amounts of money as well as often having access to deals that aren’t available or advertised to the general market.
Finally, realise that large customers are often very good for profits so they’re really in the driving seat especially if on a high and stable salary. High earners should therefore take their time, shop around and perhaps when they’re more educated about the market and the current offers they can start playing mortgage brokers off against each other.
Whatever he case, good luck on getting the best deal you can.
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