Should You Use an Advisor to Remortgage or Go Direct?
If you’re wavering about whether to go it alone to remortgage or use a mortgage advisor, this article will help you decide.
More homeowners are choosing to go down the mortgage advisor route to remortgage than ever before.
We know this thanks to the Financial Conduct Authority (FCA). It has revealed that in the first half of 2018, only 3.6% of homeowners did not have an advised sale when taking out a mortgage or remortgaging. Only 20,161 out of 550,353 arranged their mortgage or remortgage without having qualified mortgage advice.
This is a big difference to a decade ago. FCA figures show that in 2008, 35% of homeowners opted to take on a mortgage product without benefiting from qualified mortgage advice. Back then, most people would take out their mortgage or remortgage direct from their bank or building society; often in a sale which was on an ‘information only’ basis and where the customer received no direct ‘advice’.
There has been a growing loss of faith in many banks’ ability to give sound advice. The now more complex rules around taking out a mortgage have compounded this.
These rules came in the wake of the FCA’s Mortgage Market Review (MMR). It put an onus on lenders to ask more detailed questions of borrowers. This now includes information on all outgoings, including bills, pension contributions, childcare and travel costs.
The growth in numbers of people opting to use a mortgage advisor is related to this. It emphasises the scale and importance of mortgage-related advice.
When might You want to Remortgage?
You might be considering remortgaging because you have recently come to the end of your fixed or discounted rate. In this case, you will be shifted to your lender’s usually more costly SVR (standard variable rate).
Most people in this situation can save a meaningful sum each month by remortgaging to a cheaper deal. You also have the option to shelter yourself from future interest rate rises by locking into a secure fixed rate. Brexit uncertainty has only added to the unpredictability of the next rates hike by the Bank of England.
Another impetus for remortgaging is if the value of your home has grown since you took out your mortgage. In this case, you may find you’re in a lower loan-to-value band and able to access lower rates.
Or you may want to take advantage of the current low rates to free up cash from the value of your property. This could be for home improvements, a new car or holiday or to pay off debts.
So should You Remortgage alone?
If you’ve chosen to remortgage, your first decision will be whether to go direct or to use a mortgage advisor.
You may be 100% confident about the process. You may know exactly the deal you want. You may be more than happy to deal with all the paperwork yourself.
In this case, you should go direct and apply for your new loan yourself. You can do this either online, by phone or face-to-face in a branch.
Another option is to approach your existing lender for a more suitable product. Note, in most cases, doing this won’t secure you the cheapest deal. Your lender can only advise you on the most suitable remortgaging deals it has within its own range of products.
A Mortgage Advisor will Offer You More Remortgaging Options
Most people don’t feel 100% confident about the remortgaging process or their ability to research all the products available. Not all deals will be suitable for you as different lenders have different requirements about whom they will lend to.
This is why picking out the best rate or deals online can be pointless if you don’t know if you will qualify for the loan.
The best route in this case is to use a mortgage advisor. The broker will look at your current deal. They will take time to understand your financial circumstances and future plans, and your attitude to risk.
He or she will search the whole mortgage market to find the most suitable deal for you. It’s also worth remembering that some lenders only sell their best products via mortgage intermediaries. These are known as ‘broker exclusive’ deals.
That’s why it makes a lot of sense to go with a mortgage broker.
Isn’t a Mortgage Broker Expensive?
Not if you end up with the best deal for your circumstances. Making the right choice for your remortgage is important. Get it wrong and it could cost you hundreds – even thousands of pounds – more than you need to pay.
Most remortgaging products come with fees and charges. These can be hard to navigate, and it can be difficult to understand if you’re really getting a great deal.
Some mortgage advisors don’t charge a borrower anything but instead take commission from the lenders. This gets factored into the loan rate you’re offered from the start.
Most brokers, though, charge a fee. This will be either a flat fee or a percentage fee.
For most people, though, the expertise of the mortgage broker is well worth the fee. It’s worth it for both the money they save you and the stress and hassle they absorb on your behalf.
Once you’ve passed your instruction, they fill in the forms and apply to the lender on your behalf. They then respond to any queries the lender has and smooth and move forward the remortgage process for you.
If you need help in finding the right remortgaging product for you, we’ll be happy to help you here.
