Tag: FSA

The UK government’s Funding for Lending and Help To Buy schemes mean
that many banks and building societies are making the most of the
inexpensive funding available through these schemes and are approving
more lending to small businesses and those looking to purchase a home.

So these schemes have made it easier for the consumer to obtain a
mortgage, provided they meet the lending institutions criteria.

However, securing a large mortgage is still considerably more difficult
than it was prior to the credit crunch of 2007/2008. Lenders’ criteria
remain tough and recent FSA regulatory changes have also affected
mortgage underwriting. But there are still deals available and there are
a number of ways to improve your chances of having your mortgage
approved.

Increase the amount of your deposit

Maybe easier said than done but the larger the deposit you have the
wider choice of competitive mortgage deals you have a chance of
obtaining. There are significantly more mortgage deals available to
those with a 5 per cent or 10 per cent deposit than there were 3 years
ago but if you can find a 20 per cent deposit or more then you will open
up a greater range of choices.

And the better deals available
do not just come with a lower interest rate, lenders are also prepared
to be more flexible with their lending criteria for mortgage customers
looking to borrow at a lower loan to value ratio.

Pay down your credit cards and personal loans

Mortgage lending is rarely based on a multiple of your income as it
once was. Now, the majority of banks and building societies use
affordability criteria to assess whether they are prepared to lend you
the amount you want.

The cost of funding unsecured debt such as credit cards, store cards or
personal loans on a monthly basis will have a large impact on the
amount a lender will offer you on a large home loan.

Ensure your credit record is healthy

All high street banks and building societies will check the credit
record of mortgage applicants before approving a mortgage. So it makes
sense to obtain a copy of your credit record to check it is actually
accurate. This can be done online for a minimal fee through the major
credit reference agencies so is definitely worth the effort. Bear in
mind that if you have recently paid off a chunk of an unsecured debt it
may not be immediately reflected on your credit check. But if there are
any incorrect details then make sure they are corrected. Find out from
your preferred lender which credit reference agency they use so you can
check the appropriate details.

Another factor affecting a credit
record in the UK is the electoral role so make sure you are on the
electoral role for your current address.

Look for a lender beyond the high street

Many mortgage borrowers do not appreciate that there are many lending
institutions apart from those household, high street names. Whilst this
type of non-traditional lender may not be suitable for a first time
buyer if you are seeking a high value mortgage of a million pounds or
more you may find the non-traditional lenders more amenable to approving
the mortgage you want. Many specialist high value mortgage brokers have
excellent relationships with private banks, for instance, that are very
willing to approve large mortgages for high net worth individuals and
with lending terms far more competitive than the traditional lending
institutions.

A mortgage broker is a specialist who is trained to help you choose the
best deal in the market. Their services do not come for free, but the
fee is worth the money because your mortgage is more than likely to
outlast much of your furniture! So how does one choose a good broker?
Here are a few tips to help you;

a) Do you need a broker: Unlike the good old days of yore, mortgage
calculation isn’t simply about choosing between variable and fixed
interest. Almost every borrower has laid claim to a special type of
loan- you can now choose from a self-certification mortgage, an offset
mortgage or some other type. A broker can make sense of the different
types and help you choose one that suits your circumstances. If you are
one of the those who can’t be really bothered about shopping for the
best financial package, and would rather prefer someone else do it for
you, a mortgage broker is just right for you.

b) Choosing
between a tied or independent brokers: Tied brokers work for a
particular service provider and offer you loan options related to his
employers. They usually work for free, but are not always reliable.
Independent mortgage brokers however, do not work for anybody. They
charge you a onetime commission, but in return give you different
options offered by other borrowers. He or she can suggest you a loan
scheme that best matches your condition.

c) Credentials: In the
UK, mortgage brokers should be authorized by the Financial Service
Authority or FSA to give you advice on financial matters. You can always
check if your broker is registered with the FSA through the agency
website. The Mortgage Code Compliance Board or MCCB is also an authority
on this issue.

d) Get everything in writing: Mortgage brokers
in most cases promise you a lot, but when it comes to enforcing them,
almost all of them disappear into thin air! Make sure that these
promises, including details about their fees in writing.

e) Open Communication: The mortgage broker should openly communicate about the process.

f) When things go wrong: If things turn sour between you and the
broker, you can always lodge a complaint or ask the MCCB to address your
grievances. If the broker is tied to the Mortgage Code and does not
offer a satisfactory reply, the MCCB can initiate disciplinary action
against the broker.

These are just some of the points to be considered to help you find a mortgage broker.