Six ways to get the best mortgage rates

As I have mentioned previously, pre-2007 anyone could get a mortgage in some shape or form.

You could get Self-Certification mortgages where you didn’t have to prove income and Sub-Prime where you could have had a bad credit history and still secure a mortgage or even a mixture of both types. Then you had the prime range whereby you could get the best rates even with a 10% deposit (at that time)!

Since 2007 with the unprecedented credit crunch it has all changed. Lenders are cherry picking and only want the best type of borrower.

Furthermore the Financial Conduct Authority (FCA) has undertaken a Mortgage Market Review (MMR) which has now been implemented and this has escalated the problem of getting the best mortgages.

So, without further ado, here are my six best ways to ensure you get, not only the mortgage which is right for you, but at the best rates possible!

Understand your Credit

When you meet up with an Independent Mortgage Broker, don’t assume he or she will be aware of your credit history. After all it is your responsibility and as such, you should know what companies put against you. The simplest way to find out is to go onto www.experian.co.uk/creditreport.

By agreeing to a free trial for 30-days you can pay nothing but please ensure that you cancel it before the end of this period otherwise it will cost you £14.99 for the ongoing benefit. If you want to continue with it then I am sure you will find it worthwhile but just be sure you know what you are paying for.

What to do if there is an error on this report

Sadly there are occasions where there are errors. Whilst these are generally human error, they can cost you dearly as they can take a while to be cleared off your record. If you identify any issue early then it can be rectified in good time so that you can achieve the rate you desire from the marketplace. If you find an error then you need to inform the credit agency (i.e. Experian and other credit reference agencies the provider uses) normally via an online form. If the provider disagrees then you can escalate the complaint to the Information Commissioners office and the credit reference agency should help you with this.

Active Credit

Lenders don’t purely base their decisions on what is against your credit history. They all have a secret way of calculating your creditworthiness based on a credit scoring system. So for example if you apply for a mortgage and are certain that you have a clear credit history a lender can still decline you. It works like this as an example; a lender will rate their prospects say out of a 1000 marks (score) but they will only grant you a mortgage if you can achieve say 750 or above. Their internal criteria will build this score based on credit history, existing mortgage activity, loan-to-value, earnings, size of loan, being on the electoral roll, number of past credit checks against your name (more on this in a minute) and active credit!

Active credit is key as it shows that other financial institution trust you so much that they are willing to give you credit so big marks for this. If you don’t have any other credit then get some, even if you apply for a credit card and put a small amount on it each month but please remember to PAY IT OFF IN FULL each month otherwise you will be charged interest. This, in time, will help your active credit. Be careful though because if you are declined then you need to find out why so don’t go applying everywhere for credit cards!! Also, too much credit won’t look good on your history, it’s all about a fine balance!

Credit Searches against you

It really gets my goat when so many unscrupulous estate agent advisers and banks fight for your mortgage business. For many, their goal is to get you into see their mortgage adviser (most are not independent) and to force you to do a full credit check. If you pass then they give you a beautiful certificate to show that you are agreed in principle………. fantastic, or is it?

I can assure you that agreement is fairly worthless. It is an initial assessment and does NOT mean you have a mortgage agreed whatsoever. It is generally for the sales adviser to hook you into thinking you can 100% secure a mortgage so that you believe you can’t go elsewhere!!

At Conran Financial we would only undertake a credit score if we are concerned that you are “borderline” in getting a mortgage.

This is because by doing a credit score generally leaves a footprint on your credit record for other financial institutions to see and the more credit scores you have, the lower your credit score could be! We are here to advise you not to make you exposed. We know our customers love using us because we are honest and that is so much more favourable than being a slippery sales person!

Be Prepared

I am no Boy Scout (sorry, a ‘be prepared’ bit of banter) but you are potentially undertaking a big commitment. There is a lot of documentation you will need to get to a lender to fully commit to you. When you apply for a mortgage it will be subject to due diligence and will expire if you cannot provide documentation in a timely manner. So go through your financials and have the following ready; 6-months worth of bank statements, 3-months payslips or if self-employed 3-years worth of accounts, a P45 or an SA302 if self-employed, driving licence, passport, proof of residence, such as a credit card statement or utility bill, dated within the last 3 months showing your home address on it.

Finally be aware of what you spend monies on and have control of your outgoings. The lenders are likely to look through your bank statement and question you on your outgoings before they finalise their due diligence process. Know what outgoings can easily be stopped such as the Gym membership and cable TV. If affordability is close then tell them that you will cancel these and then take them back out once you are comfortable with your monthly mortgage payments!

Choose the best broker you feel comfortable with

There are many brokers out there so how can you choose the one you feel most comfortable with. There are many questions to ask as well as getting the right feel for their personality. Seeing as you are about to have a professional relationship with them you might as well like them. So ask them questions such as;

1) How long have you been advising on mortgages?
2) How long has your company been trading?
3) Are you a mortgage specialist or do you do pensions and other such advice (ideally you want a mortgage specialist as they will have more experience in dealing with lender generally)?
4) Do you work from a panel of lenders or are you an Independent Mortgage Adviser?
5) What fee will you charge me, if any?
6) What mortgage do you have and why?

So there you have it, six of the best……… financially anyway.

I hope you have found this interesting and it would be a pleasure for one of my team of Independent Mortgage Advisers to help you with a future mortgage.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT. Conran Financial is a trading style of Charles Conran Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England No: 03734618. Registered office: 221 Greenwich High Road, Greenwich, London SE10 8NB