Even today, many buyers are not aware of the changes brought about by the Mortgage Market Review, which came into force in April last year. More stringent criteria and affordability rules were introduced making mortgages both more difficult and time consuming. Before searching for a property a buyer needs to know how much they are able to borrow and ideally have a decision in principle with a lender before proceeding with any offer (this is where an initial credit check is undertaken and the lender provides a statement of what they are prepared to lend to the named borrowers subject to approval of the property). This helps reduce the level of “risk” in the eyes of the seller and it is usual for the selling agents to ask if this is in place.
You may decide to go it alone, shop around and deal directly with the lender without using an intermediary mortgage broker. However, there are pitfalls that a buyer may not know if they are unfamiliar with the buying and mortgage process:
- Each time you obtain a decision in principle it leaves a “footprint” on your credit history;
- It is the purchasers responsibility to ensure they a have the funds to conclude the contract and complete. Once an offer is accepted a lot of pressure may be exerted on purchasers from the selling solicitors to lift survey clauses and ensure the loan is progressed and issued as quickly as possible, particularly where there is good level of interest on a property;
- You need to be ready to move fast. Sometimes even getting an appointment to get a mortgage application going once an offer is accepted, may take a week or two. If you are too slow or if there are delays, sellers may not hang around, particularly where there are other interested parties;
- A decision in principle is not a certainty that the mortgage will be approved, it may not;
- Different lenders have different policies. For example, not all home reports are accepted by all lenders – each lender will have an approved panel list of surveyors. Other lenders insist on getting their own survey (and likely to charge you for this survey). Also a property may be unusual in some way and this may restrict the lenders willing to lend on that property;
- Buyers often get frustrated trying to find a person to speak to that can answer queries such as accepting the home report decisively and quickly.
An Independent Financial Advisor can be worth their fees in Gold. They will take away a lot of the stress and hard work in getting the mortgage. They know the different lenders quirks, which lender may be best suited for your particular needs and circumstances, and if a property is unusual, which lender is likely to lend on that property. In addition, they have access to products not on the open market and have contacts within the banks that can keep the mortgage progressing and deal with matters arising quickly. After all they do have a duty of care to the client!
Our advice to clients is that unless you are familiar with the buying process and have a good relationship with a bank, it helps to use a mortgage broker. But the even better news is that we have an Independent Financial Adviser who will not charge fees to a McQueen Legal client!
We are currently advising a minimum of 8-10 week date of entry when offering with a mortgage requirement. This may be a disadvantage when you find you are competing against a cash buyer or if the seller needs / insists on a quick date of entry.