Category Archives: Mortgage Tips

Second Mortgage: All You Need To Know

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You were keeping up with your mortgage payments. You thought you had all your finances planned to the nitty-gritty with a detailed budget in place and then bam! Life happens. Unexpected repairs or large monthly bills have you cornered. You’re stressed on how to cover these costs. In such cases, a second mortgage may be the solution.

What Is A Second Mortgage?

First mortgages are intended to help finance the purchase of a home by providing funds. This helps ensure you don’t have to empty your life savings from the bank account or put up thousands of dollars at once because, let’s face it, how many of us actually have that amount lying around?

Second mortgages, on the other hand, allow you to borrow against the equity of your home. The equity in your home is the amount of value that is not financed, so in other words, you are essentially re-purposing the money you put into your home.

So, basically, a second mortgage is a lien that’s taken against a property if a new loan is made but a previous loan remains outstanding. Second mortgages are entirely separate loans with their own application procedures, closing costs, and monthly payments.

In fact, you don’t need to obtain the second mortgage from the entity financing your first one. A separate financing institution can be contacted with a request for another mortgage and depending on your financial position, currently and in the forthcoming future, you can get easy approval for a second mortgage.

When your credit score is good and there is twenty percent equity in your home, the best option for a second mortgage is a home equity line of credit (or HELOC). However, if you have weak credit and/or insufficient equity, you would need a second mortgage from a trust company or private lender.

Considerations For A Second Mortgage

Lenders tend to examine four prime areas to determine a second mortgage applicant’s qualification:

Equity

With more equity on your side, your odds of obtaining a second mortgage rise substantially. If you are buying a house, a bigger down payment will also decrease the risk that the lender will take on. Utility, telecommunications, and insurance payments will be considered, as well as confirmation letters from your service provider.

Income

Your lender wants to ensure that you will be able to make payments by verifying that you have a reliable source of income. If your income stream is not dependable, it will be difficult for you to score that second mortgage.

Credit score

Credit scores are also crucial in determining the terms of your second mortgage. These represent an individual’s ability to repay a debt. So, your interest rates will be lower if you have a high credit score.

Property

Ultimately, the service-providing institution will need to secure their investment made in the event that you are unable to keep up with your payments.

Why Take Out A Second Mortgage?

Homeowners are increasingly opting for second mortgages as a supplementary financing source. A second mortgage typically amounts to ten to twenty percent of the property’s value. And they are generally paid out in lump sums. So why take out a second mortgage?

If you cannot come up with a twenty percent down payment for your dream house, a second mortgage can fill the financial gap between you and your dream abode. Also, a second mortgage allows you to borrow from your house’s equity.

The tax-deductibility of debt in the form of primary, secondary, and home equity lines of credit has led to consumers taking out home equity loans to consolidate other debts.

Downsides To A Second Mortgage

It doesn’t come without downsides, though. For instance, if you become unemployed or experience another financial hardship and cannot make your payments, you will have to say goodbye to your house.

You would also be limiting the amount of equity in your home which many people count on to help them in retirement.

In most cases, your second mortgage will carry a higher interest rate than your first mortgage. The subordination of second mortgages makes them riskier for lending institutions, which charge a higher interest rate to compensate for any likely losses they might incur if the deal does not work out.

While second mortgages may help you out when in a financial rut, they can be quite costly at the same time. There are a lot of costs associated with obtaining a mortgage such as credit checks, appraisal costs, closing costs, origination fees, etc. You will need to bear the cost for all of these.

So, before you make the decision to take out a second mortgage, be sure to review your financial standing and the possible repercussions if you are unable to follow through.

Understanding Power of Sale

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stop the Power of Sale

As mortgage costs have increased in recent years – and the COVID-19 pandemic has caused many to lose their income – more Canadians are finding it difficult to keep up with their bill payments. But if you are falling behind in your mortgage payments, you may find yourself facing a Power of Sale.

What this essentially means is, that if you cannot pay your mortgage lender what you owe them – plus any additional legal and admin fees that they may have incurred – the courts could give your lender the authority to evict you and sell your home.

What is a Power of Sale?

A Power of Sale is an option that a mortgage lender may use when a borrower becomes unable or unwilling to make their mortgage payments. It is a way that the lender can recoup their money. Through a series of steps (defined by The Mortgage Act, 1990), the lender can issue a notice to the borrower, and after a set period of time, they can take possession of the property and sell it to recover their money.

Unlike with a foreclosure, the lender never gets the title to the property – only the authority to sell it. This means that the borrower gets any leftover proceeds from the sale after the lender (and perhaps other creditors) has recovered their money. It also means that the lender must sell the property at a fair price and not at a deep discount – otherwise, the borrower could sue.

What can borrowers do if they are facing a Power of Sale?

At any point during the Power of Sale process, it is possible for the borrower to stop the Power of Sale – right up until the closing date of the sale. They may do this simply by paying the lender what is owed.

In some cases, it may even make sense for the borrower to sell their home themselves before the lender has a chance to do so.

This can be done using a variety of strategies ranging from digging into savings to refinancing or getting a second mortgage or unsecured loan. The best strategy for any given borrower will depend on their unique circumstances.

This is why in most cases, it pays off to work with a qualified mortgage broker who can work out the best solution.

Can a buyer get a deal by purchasing a home that is under Power of Sale?

If you are in the market to purchase a home, you may be wondering if you can get a better deal by buying a home that is under Power of Sale.

You must remember, however, that the lender is still obligated to sell the home at a fair market value, so you won’t be getting any deep discounts. That being said, buying a property that is under Power of Sale may help you avoid getting into a bidding war with other buyers.

You should however approach these types of purchases with a little bit of caution. A Power of Sale property is usually sold “as is” so you will want to be sure you are aware of any potential issues. Furthermore, you need to be aware that the borrower will be able to stop the Power of Sale right up until your closing date if they can come up with the funds to pay the lender.

Preparing to purchase a Power of Sale home

If you are comfortable with purchasing a Power of Sale home and are aware of the potential pitfalls, it could be a good move. It is highly recommended however that you hire a home inspector and make your purchase conditional on a satisfactory home inspection.

Final thoughts

A Power of Sale is an unpleasant situation to be in but this process is sometimes necessary in order to protect the lender. If you find yourself in this situation, it is best to speak with the lender or your mortgage broker as early as possible so that you may resolve the issue quickly. And if you are thinking about buying a Power of Sale property, it is recommended that you work with a real estate professional who has expertise in buying these types of properties.

 

 

A Guide To The Mortgage Loan Approval Process

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Applying for a home loan seems quite a complex affair, especially to someone who has little or no experience with buying real estate, and rather than simply making the application, you are advised to carry out a little research first. To assist you, here is a guide to the home loan approval process.

Mortgage Loan

Credit Score

Every adult Australian has a credit score, which lenders can access when a person submits a loan application, so prior to making a mortgage application, find out what your credit score is. The lower your credit score, the harder it is to get a mortgage application approved, and if you have outstanding debts, you are advised to settle them prior to making a home loan application.

There are specialist mortgage brokers for bad credit home loans you can count on. If you have a less than perfect credit score, talk to an online lender who is experienced with loan applications from people with bad credit scores.

Mortgage Pre-Approval

Prior to hunting for property, you really do need a mortgage pre-approval, which means that, based upon the information you have given, the lender is prepared to accept your loan application. Sellers do not take any person seriously if they do not have mortgage pre-approval, as they know that without it, there are no guarantees that you can make the purchase. There are useful articles you can find online that detail the steps involved in mortgage application, which are must-reads for any new loan applicant.

Mortgage Pre-Qualification

You will likely come across this term during your loan hunting experience, and pre-qualification is not to be confused with pre-approval, as they are two different things. A mortgage pre-qualification is usually given after the lender’s representative has a quick look at the information, whereas pre-approval means that, based on information received, the lender is prepared to accept the proposal.

Mortgage Application Information

When you apply for a home loan, the following information will be required:

  • Employment history and details
  • Income details
  • Credit history
  • List of assets
  • List of current debts
  • Information on the property you wish to acquire

Specialist Mortgage Brokers

If you think that any of the above might not present you in the best light, there are specialist mortgage brokers who can often help a client to get a home loan, despite having a bad credit score. One reason for this is that the security for the loan (the property) will always be there, so the worst-case scenario is property repossession, and lenders always consider the risks. If the property is worth more than the amount borrowed, then technically, the lender cannot lose, although not all mortgage lenders will go that far.

If you are planning to apply for your very first home loan, do some research prior to making a loan application, and by talking to an independent mortgage broker, you can receive the best advice, which is free to the borrower. With the help of an expert, you can quickly negotiate the loan application process and once you have pre-approval, you can begin to look at properties with a view to making an offer.

3 Things to Consider when Buying Your First Home

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One of the major milestones and most exciting times of your life is when you make the decision to buy your first home. However we often get caught up in the status quo, whether it is because your friends are all buying homes, or you have reached the magic age where it is determined you should have one.

Buying Your First Home

While you may be eager to find that perfect house and move  in, there are a three major things you should consider before buying a home.

Are you actually ready for home-ownership?

Although it may sound crazy, the first question you should be asking yourself is if buying a home makes sense for you.  Since you were little, you probably dreamed of growing up and owning your own house in an area that you like.  After some consideration, you may come to the conclusion that you are better holding off. For example, if you travel often for work, you will not be able to enjoy the home that you are making your mortgage payments on. Worse yet , you may find yourself in a situation where you need to relocate soon after you purchase your home,  and forcing yourself to have to go through the house selling ordeal.

Can you actually afford it?

We live in a time when many people try to live above their means. People are constantly buying the newest cars, electronics, and whatever other toys their hearts desire. They are also putting themselves into tons of debt every time they buy something new. It’s important to take a good look at your finances and make sure that you are in this for the long term.  Consider how steady your pay is, debts you already have (student loans, credit card bills, etc) and an emergency fund for any unseen circumstances.  Often times it’s a hard realization that you might have to settle for something a little different than your dream home.

Are you responsible?

You may have reached a point in your life where you are finally financially responsible. You pay everything on time, never call out of work, and generally don’t live beyond your means. Great, you can probably afford your mortgage and not miss any payments. Have you considered what to do with your home when you go on vacation? In the summer, you may need to hire someone to come and take care of your lawn for the week, and in the winter you may need someone to make sure your heat is on so your pipes don’t freeze. You are now responsible for the maintenance of your house, and it is important to stay on top of it or you may have a few large bills later down the road.

If you still think that you are ready to buy a home, then the first step is to begin talking to different lenders and see what is offered. You should be looking to get the lowest mortgage rate you possibly can. A loan officer can also point you towards a program that will fit your needs. After talking with the loan officer and deciding on your program, you rate will be locked. Your home will go through a final appraisal, underwriting will approve the conditions, and you will get a final approval. Once you are approved, you can get ready to move in, and enjoy your new home!

Fixed vs Variable Mortgage Rates for Buying a New House

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Before buying and moving into a new home there is one big decision to make and that is whether to choose a fixed or a variable mortgage rate. This decision will determine what interest rate you are going to pay on a monthly basis for your mortgage for the next twenty years or so, so choosing the right rate is definitely one of the most important things to do. However, there isn’t one correct way to go about this, as there are many factors you need to take into consideration before you make that initial decision, but here are some facts to help you out.

Fixed vs Variable Mortgage

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is one where there is a set interest rate that cannot change in the duration of the mortgage (if you don’t refinance). The fixed mortgage rate guarantees you a determined interest that you have to pay each month.

The advantage of a fixed-rate mortgage is that the homeowner will not have to contend with varied loan payment sum of money that changes with the interest rates.

What is a Varied-Rate Mortgage?

A varied-rate mortgage or adjustable-rate mortgage (ARM) is one where typically the interest rate is not fixed and can vary from month to month, potentially going either higher or lower over longer periods of time.

The biggest advantage of variable rate mortgage is that the interest rate modifies periodically. Monthly principal and interest payments vary according to a preset agenda throughout the life of the loan.

Most creditors and private firms need a down payment of about 5 to 20 percent of the entire sum of money from a borrower. This is more than the government mortgage loans with lower down payments. Your down payment also affects your loan-to-value ratio, or the amount of stake you have in your home compared to your mortgage. If you put down a larger down payment, you’ll start off with more equity in your home.

Factors to Keep in mind before Applying for a Mortgage Loan

While taking a fixed or varied rate mortgage loan for purchasing a brand-new house, it is important to keep in mind your monthly income, interest rate of the loan and actual price of your house.

You need stable and reliable sources of monthly income before applying for a mortgage loan.

The interest rate of the loan is an important factor to consider as it will decide how much money you will have to pay every month. While the whole act of loan processing will continue with paperwork and reviewing, the rate of interest will vary.

The price of a house impacts your mortgage. For example, if you want to purchase an expensive house you will have to make a larger sum of money as down payment or convince the seller to make some reduction in the price. Similarly, if the house costs lesser, the amount of money as down payment will be less.

It’s Personal

While you may be able to find great real estate deals online, make sure you don’t get carried away and rush into anything when applying for a mortgage. Only you know your financial situation which is the main thing to bear in mind when deciding to go with fixed or variable mortgage rate. Variable-rate mortgages can be risky for those who don’t have a high or constant income. If your financial situation fluctuates throughout the year, fixed rate may be the better option for you. If you are willing to take the risk, and believe that in the future the rates will go down, choosing the variable interest rate is the way to go. Especially nowadays, with all that economic turmoil going on choosing the variable interest rate can possibly save you some money.

Take Your Time

Last but not least, take your time. Do your research and homework and find out as much as possible about your possible lenders and what interest rates they offer. Use the internet as a source of information. Read about other people’s experiences, and ask yourself these questions: What monthly mortgage payment could you afford at the moment? If interest rates rise would you still be able to afford those payments? How long are you planning on living in the property? Either way you go, make sure you understand the consequences of your choices.

Keep in mind that making the decision to go with fixed or variable interest rate doesn’t have to be the last decision you’ll ever make, as you can always refinance your mortgage. Whatever you do, make sure you evaluate your personal situation as well as what’s going on in the market at the moment, taking into consideration all these factors will help you to make the right decision.

Benefits of Re-mortgaging Your Home

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Your mortgage is more than likely to be the biggest single expense in your household budget and one that has to be paid for anywhere up to 25 years, sometimes more.

Why remortgage?

With the pressure on household finances continuing it’s important to make sure that you’re getting the best possible deal on your mortgage. You could benefit from shaving significant amounts off your monthly payments by remortgaging.

Re-mortgaging Your Home

The first thing you need to do is to review your current product. Check the rate and the term of any deal you are on. You also need to make sure there are no exit penalties that can be applied by the lender if you try to break out of the mortgage earlier than the terms allow.

Even if there are exit penalties to pay, it may be still be cheaper to move but you will need to calculate this very carefully to avoid being stung by high charges. You also need to check the fee on any new mortgage as some can be very hefty.

With interest rates historically low, mortgage rates are also very competitive so it’s potentially a good time to switch. However the best deals are reserved for people who have plenty of equity in their home and so present a lower risk to lenders.

Other benefits of remortgaging

Some people will want to remortgage so they can raise money. This can be more cost effective than borrowing any other way, for example using a loan or on a credit card, but you must make sure you can keep up the payments.

If you get a new, lower rate it may be possible to borrow extra money and still pay not pay much more than you do at the moment, but remember that your home could be at risk if you cannot keep up the mortgage payments.

Remortgaging may also allow you to extend the term of your mortgage for longer which has the advantage of making monthly payments cheaper, but will cost you more in the long run.

If you do get into financial difficulties then IVAs managed by Churchwood are a good way to manage your debt. An IVA allows you to pay off your debts with an affordable monthly payment. In addition an IVA comes with a guarantee that remaining unsecured debts will be written off after an agreed time   normally 60 months.

What kind of mortgage should I get?

Anyone remortgaging will need to compare all the available mortgage products from different lenders. You will also need to decide if you want to lock into a fixed rate deal and for how long. Another option is to consider a discounted or tracker product, where you would benefit if the Bank of England Base Rate dropped even further, but pay more if it started to rise.

With some experts predicting that rates will stay low for many years to come, a lifetime tracker may be a good deal in the longer term.

Whatever the reason for a possible mortgage switch, it’s a fast moving market with new mortgages coming into play all the time and others being removed quickly, so you will need to act fast if you see a competitive product that’s right for you.

How to Choose the Right Mortgage Loan

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In Canada, if you plan to purchase a home, more than likely you are interested in learning about the various types of home mortgage loans that are available. A mortgage is nothing more than a loan that uses the home you purchase as collateral. This means if you do not repay the loan as specified in your mortgage agreement, the lender will retain the home to resell in order to obtain the money you borrowed.

Mortgage Loan

Many different institutions lend money to those looking to purchase a home including pension funds, finance companies, credit unions, trust companies, and banks. Choosing the right home loan is essential as it can affect your overall financial health. Getting the mortgage loan depends on a lot of things and qualifying for them is also important. You can even obtain loans on bad credit, but it comes with a few limitations.

In order to obtain a loan, you should be aware of the different types of loans that are available in Canada so you can make an educated decision on the one that will fit your needs the best.

Here are some of the types of mortgage loans you can acquire:

Conventional Mortgage Loans

A conventional mortgage loan is one that will provide you around 80% of the appraised value of the home or in some cases 80% of the purchase price of the home. To obtain a conventional mortgage, the home buyer will be required to pay a down payment of 20% of the purchase price upfront.

High-Ratio Loans

A high-ratio mortgage is one that will provide you around 80% of the purchase price of the home. With this type of loan, you will be required to pay around 5% of the purchase price as a down payment. This type of loan does require the home buyer to carry mortgage loan insurance. This type of insurance will protect your lender if you cannot pay back the mortgage loan. In the majority of cases in Canada, lending companies are required to have mortgage insurance by law.

Open Mortgage Loans

An open mortgage is one in which you can repay the loan in full or in part without paying any penalty cost. In the majority of cases, this type of loan has a higher interest rate than closed loans but is often chosen if you plan to make extra payments or if you are a plan to sell the home in a short amount of time after purchasing.

Closed Mortgage Loans

A closed mortgage is one that does not allow the home buyer to make any extra payments and will charge a fee or penalty for those that wish to pay the mortgage off before the term of the loan. The interest rate offered by this type of loan is usually lower than other mortgages.

Fixed Rate Mortgage

A fixed rate mortgage is one in which the interest rate will not change at all during the term of the mortgage. With this type of home mortgage loan, it is easier to manage the payoffs as the interest rate doesn’t change. You can set your monthly budget accordingly to manage your debt payment. Fixed five-year mortgage loans are one of the most common types of home loans in Canada.

Variable Rate Mortgage

A variable rate mortgage is one that has interest rates that change according to the changes seen in the financial market. In the majority of cases, the amount you pay monthly will remain the same but the amount of money that goes for the principle will be different. One benefit of this type of mortgage loan is that you can get benefits when the interest rate falls in the market.

Convertible Mortgage Loans

A convertible mortgage loan allows you to change the loan terms at any point without acquiring any penalty. You can change your variable loan to a fixed rate loan or a short term loan to a long term loan whenever you want. The interest rate will change according to the changes in the loan type.

Hybrid Mortgage Loans

In this type of loans, the borrowers are allowed to combine two types of loans like fixed-rate loans with variable loans. Under this scheme, you can divide the loan amount into a variable loan and fixed rate loan. The terms of payment vary according to the type of loan. For instance, with a fixed rate loan your interest rate will be fixed, and with a variable loan, the interest rate will switch based on the current market trends.

The Bottom-Line

You have a lot of options when it comes to mortgage loans. Choose the right loan based on your requirements so that you can comfortably pay them off without putting a strain on your financial health.

5 Essential Tips For Securing A Mortgage

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Getting a mortgage need not be a painful endeavor. While the idea of saving in earnest can be something of a burden, there are some failsafe tips that you can use. For many, the thought of homeownership seems like an unaffordable and unobtainable dream. But, it doesn’t need to be that way.

Securing a mortgage for buying a house is easier if you know where to look. Even people with bad credit can secure a loan of some kind. One of the best things you can do to secure a mortgage is to be prepared. When you apply for loans you need to be ready for overcoming any kind of huddle.

Securing a Mortgage

Here is how you can get a mortgage for owning your own property by using these five essential tips:

1. Check Your Credit Rating

Your credit rating could be the thing that is holding you back. You need to make sure that you have a clean record and great financial health before you choose to go for a mortgage. With a vast array of online tools to help you, you can check what your credit score is before going to the bank. This is important. You need to make sure that you have an excellent credit score. If your score is less than anticipated, now is the time to start making positive and proactive steps into fixing it. The simplest way to do this is to make sure that you are paying your bills on time.

2. Look into Government Schemes

Government Help to buy plans is ensuring that everyone can get on the property ladder. With only a 5% deposit required for many of these mortgages, a 5 bedroom 3 baths home in Rickmansworth doesn’t have to be a dream. It can be a reality.

Government schemes are in place to help those on low incomes get on the first rung of the property ladder. Speak to your mortgage advisor to see what can be done for you. Alternatively, look at the Gov.uk site for more information.

One of the top reasons for opting for the government scheme is that they are safer and convenient than the other schemes.

3. Have a Budget in Mind

Budgeting when you are looking into securing a mortgage may seem like an oxymoron. But, if you are keen on buying a property then make sure that you have a budget in mind. Aiming for the lower end of the market will ensure that you have ‘pay money’ at the end of the month. You don’t want all of your spare cash tied up in the property. Make sure that you factor in living expenses and stick to your budget.

A budget can help you stay in control of your finances. With the right budget strategies, you can save more. There are many ways to create a budget. You can use the latest mobile apps, an excel spreadsheet or a good old pen and paper. Make sure you set a budget for the essential things like food, rent, and travel. After this look for the areas where you reduce the cost like eating at home rather than out or recycling the old stuff instead of buying new.

4. Be Flexible When it Comes to Location

While you may dream of living in central London, where all the hip and happening people are, this is going to cost you a fortune. By being flexible on location, you can grab a fantastic property at an exceptional price. What is more, you are more likely to secure a mortgage on a property that is cheaper. You don’t have to go to the other end of the country to find a great deal. Even the neighboring postcode to your preferred location could save you a small fortune in the long term.

Buying a property in a budget that you can handle is wiser than chasing a dream that is too expensive. Having a home of your own doesn’t have to be an expensive affair. By choosing a cheaper but safe and convenient location you can easily secure a mortgage.

5. Independent Mortgage Advice

Many people seek the advice of banks. But, there is no substitute for independent mortgage advice. By doing this, you will not be tied to one provider. What is more, independent mortgage advisors don’t have vested interests in your cash. Explore all avenues for a brilliant deal on your mortgage.

The Bottom-Line

Securing a mortgage should be an impossible task. You can easily secure the mortgage by following a few essential rules. These basic but highly effective tips can help you get the financial assistance you want to buy a new house.

Find The Best Mortgage Advice

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Mortgages are essential for people who need financial assistance for things like buying or building a house or buying a car. By choosing the right mortgage you can not only get the right financial assistance, you can also pay off the debt easily.

Mortgage

You must be equipped with a lot of information about available mortgage products to make up your mind as to what will suit your purpose and pocket. Need advice? Where to locate a good advisor? And how much do you have to pay for getting advice on a mortgage product? 

This article throws focus on how you will find the best mortgage advice when so many financial advisors are all around to extend their help.

How to Start?

With too many offers available at a time, making a choice will be tough. What will you do? Will you walk along the highway and drop in every financial house to seek their advice? Though it is less likely that you will do so, still even if you do so, there is a little chance of getting unbiased advice. They are doing business and so will want you as a marginal addition to the list of their clients. Even if they claim to have a separate advisory body which works independently, an unbiased approach is least expected.

A few of us are aware of the fact that all mortgage products are not be presented to the prospective borrowers as some reserved choices are only made available through the agents’ network.

Internet Search

Internet surfing is the best course of action to learn the rates and quotes as offered by different companies. Most of the companies have opted for online advertising by providing details about their products on the World Wide Web. Browse through their website to get the best rate and conditions pertaining to a particular product. Conditions are important but may not appear in publicly advertised material of the lender.

However, you have to pay a fee for placing your business. Generally, normal service fee is within 1% of the total amount borrowed but may differ depending on how much effort has been put in.

Comparing services and rates offered by different companies is one of the best ways to choose a plan that works for you. On the internet it is easier to see the services and rate (if it is available online). You can ask for quotes from different companies and compare them to choose the right mortgage plan.

Hire an Advisor

Hiring an advisor for searching on your behalf and making necessary comparison between the available offers won’t be a bad idea, especially when you can afford to pay for the service. Hiring an expert can work for people who don’t have an extensive knowledge about the mortgages and need some kind of help in finding the right plan.

The mortgage advisors can be divided under two heads – Independent Mortgage Advisor and Independent Financial Advisor.

  • Independent Mortgage Advisor

Till date, the independent mortgage advisors are not guided by any statutory regulation. However, majority of them subscribe to Mortgage Code. It puts them under obligation to conform to certain procedures in regards to conduct and advice. Many lenders prefer introduced business from the advisors who are registered on the Mortgage Code Register of Intermediaries. For registration, an adviser must own a current credit license issued by the Office of Fair Trading. All these set a standard guideline for both the mortgage lenders and intermediaries as well as protect the borrowers’ interest too.

  • Independent Financial Adviser

These advisors are regulated by the Financial Services Act, 1986 and Conduct Rules of 1987. They have the legal authority to offer advice on the regulated products and sell the same. These regulated products include investments, pensions, endowments, mortgages etc. These advisors must be registered on the Mortgage Code.

Get your Credit Score Right

It is important that you have a good credit score to begin with. Before you go seeking advice from the experts, it is important that you do a little research. Know the landscape of the mortgages and how it works. Self awareness is one of the effective ways to find the right financial assistance. You also need t ensure that you have good credit score, which will have a huge influence on what kind of lenders you attract. The greater the score the better are your chances. Make sure you don’t have too many debts already. Along with that you need to have a good financial plan in place to pay off the mortgage in time.

The Bottom-Line

Finding the right mortgage involves taking advice from the right person. When it comes to finances you cannot take chances. Hiring an advisor is one of the best ways to find the right solution. With the right information you can make the right decision.

5 Tips to Get Best Mortgage Broker Online

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The most challenging part of getting a good mortgage deal is to find out a reliable broker. The task becomes more difficult when you search for a broker online. There are so many frauds in the industry that it is really difficult to trust an agent. Though a large number of them have been weeded out of the industry during the last economic meltdown, it is still wise to practice caution. There are some simple ways to scan the credibility of a broker and deal with the right person. Ask a broker the following 5 questions and you can decide whether the person is worth relying or not.

Get Best Mortgage Broker Online

Can you help me in getting the best interest mortgage loan?

It is important to go with the interest rate that you can afford comfortably. The broker gets commission once you sign up a deal. So, it is not in the best interest of the person to get you the lowest possible rate. That is why you should prioritize the broker who thinks what works in his clients’ favor. The broker must be patient to provide you with the latest updates on mortgage rate that keeps on changing frequently.

How much closing cost will I need to pay?

Lenders and other parties involved in mortgage loan transaction spin quite a goodly sum on processing fees. Your broker is required to inform you about the estimated fee before any deal is finalized. Ask the broker to give every piece of information in writing.

Can you get me any lock on mortgage interest rate?

Mortgage interest rate is very much volatile and keeps on sliding up and down almost day in and day out. You may want to place a lock on the rate if it shows any continuous upward rise. Locking may increase the interest rate by one percent or may keep it fixed. Also inquire if you have to pay any additional fees for locking and the time duration of ‘lock on mortgage’ rate.

How much is the prepayment penalty for mortgage loan?

Prepayment penalty can go up to 1% of what you have received as loan. It will be roughly $3,000 in figure on an average home. You may also pay six months’ interest as prepayment penalty. However, this will be much less than the amount what you pay as per current low rate. It is sometimes possible to avail the lowest mortgage rate if you agree to stringent prepayment penalties. Find out which penalty criteria suits your case and try to optimize benefits on it.

Will the down payment have any impact on the cost of total mortgage?

Your broker may ask you to make down payment 3-5% of mortgage loan. However, paying so little will cost you a heavy sum for bearing the consequent expenses. Majority of the lenders will require you to pay less than 20 percent as down payment for availing private mortgage insurance. It is better if you consider both the plus and minus points of making larger and smaller down payment.