Mortgage rates have been at the front of the news agenda for weeks. September’s ‘mini-Budget’ saw deals disappear and rates rise sharply, as the cost of Government borrowing increased.
Since then the market has been in an almost constant state of flux. In October the average two-year and five-year fixed rates hit recent peaks of 6.65 per cent and 6.51 per cent respectively – higher than they have been for several years.
Since then the average rates have been steadily falling with the five-year average now back below 6 per cent, but continued lender caution and talk of house price falls mean getting the right mortgage for you is still far from straightforward.
Helping hand: The right broker can be a valuable advisor to walk you through buying a house and working out the best mortgage option for you
And that is before you consider the impact of any future rises in the Bank of England’s base rate.
The Monetary Policy Committee is expected to increase the rate from its current level of 3 per cent when it meets on 15 December, which some say could push mortgage rates up again and make buying or moving increasingly unaffordable.
>> Check the latest rates using This is Money’s mortgage calculator
Matt Coulson, mortgage adviser at Heron Financial, says: ‘Currently there is a big “wait and see” trend, and it is totally warranted given what has been reported.
‘The major change we have seen right across the board is that customers are keen to understand what their options look like, but they aren’t taking that forward and making a decision.’
At times like this, it may be sensible to turn to a mortgage broker to help you assess your options and what you can afford. But how do you know if a broker is the right one for you?
We ask experts what you should look for when choosing a broker and the questions you should ask before becoming their client.
How quickly can they get you a mortgage offer?
A good place to start, suggests Kensington Mortgages chief operating officer Vicki Harris, is asking your potential broker about their availability and the current expected timing for the broker’s recommended lender to make a formal offer.
The latter, she says, will play a key role in securing a mortgage deal at the right time.
Rapidly changing rates over the past few months have meant lenders are dealing with increased demand with many believed to have pulled rates, or kept them artificially high for a period, in order to maintain a level of service.
In a fast-moving market, avoiding delays at the hands of lenders and mortgage brokers is crucial.
How many lenders do they work with?
It is important to know how many lenders your broker has access to. Making sure that your broker has ‘all of market’ access increases your chance of getting the best deal, says Nick Mendes, mortgage technical manager at John Charcol.
While many lenders offer exclusive rates for intermediaries that aren’t available if you go directly – one of the benefits of using a broker – some brokers may only work with their preferred providers, limiting your choice.
This is especially important if you have any special financial circumstances, such as blips on your credit record.
‘This is key, as an increasing number of borrowers may not fit the lending criteria of the high street banks and so may need to look at some of the more specialist options in the market,’ adds Harris.
Do they deal with ‘people like you?’
If you have special income or wealth circumstances, such as being self-employed or having a sporadic income, it’s worthwhile making sure your broker not only fully understands your needs, but has experience working with others in similar situations.
‘The right broker should have a consistent record of dealing with people “like you,” so it’s important to iron this out at the very beginning,’ says Kevin Roberts, director at L&G Mortgage Club.
‘A good starting point can be asking a potential broker about the type of customer they usually deal with’.
A good match: Making sure your broker has experience working with clients in similar financial situations is a key part of choosing the right person for you
However, making sure your broker takes time to understand your circumstances and what you need from your mortgage isn’t only important if you have a different income profile.
‘Getting this wrong can mean it’s a lot more expensive for the borrower,’ says Harris.
‘For example this could be in the form of trade-offs between price and speed; benefits of fixed rates versus tracker rates; choosing between a mortgage that offers higher fees or lower rates; the likelihood of needing to get out of the mortgage and what the lender’s early repayment charges are.
‘All of these options should be assessed by your mortgage broker depending on your individual needs.’
What fees do they charge?
Knowing what fees your broker charges and how the payment works is an important part of making sure you pick the right adviser for you. Some charge at the point of an offer, while others charge on completion.
Before you choose who to work with, getting a comparison of fees can be a useful way to work out the sort of price point you will be looking at for services.
Rates not only differ between brokers but also depending on your mortgage size and the complexity of your needs.
It is also important to understand what is included within those charges. For example, does the mortgage broker support you through the whole process, or does the admin work get referred to another team member or department?
What other services does the broker offer?
If it is your first time buying a house the process and checklist of things you need to consider may be overwhelming.
It could be worth asking a potential broker what other services or products their firm offers, such as insurance or debt consolidation advice.
However, it is important to shop around and not simply accept their recommendations. They will often receive a commission for referring you to their partner firms, and you may find a better deal elsewhere.
Likewise, some offer hard credit searches that will help narrow down the lenders you are likely to be able to borrow from.
Have they worked in a tricky market?
Mortgage rates have been low for over a decade and while this has been beneficial enabling many to get on to the housing ladder, it means that as interest rates rise you need to make sure you are working with a broker who is experienced in these conditions.
Options that would have been written off before, such as starting on a tracker rate, now may be the most cost effective option and it is beneficial to have an adviser who has experience working in these conditions.
But, don’t necessarily equate longevity with the individual being the right broker for you, warns Mendes.
Don’t forget to check their reviews
Finally, always check the reviews for brokers or firms before proceeding.
‘Ultimately, whether you’re a first-time buyer or an experienced borrower, it’s crucial that you feel supported by your adviser,’ says Roberts.
‘Take the time to do your research, whether that’s through Trustpilot ratings, talking to friends, or reading online testimonials.’
This post first appeared on Dailymail.co.uk
