What are the cons of working with a direct lender
Applying for a mortgage can feel like trying to rub your tummy and pat your head whilst holding down all your other day-to-day commitments. It’s a time consuming, challenging and potentially costly way to secure a mortgage.
Time
Are you considering applying directly to the bank that has your current account, for your mortgage, or the company that sorted out a relative’s mortgage for them, or maybe you are considering a company you’ve seen on TV as they have entertaining adverts? STOP! Finding the right mortgage deal takes time. You’ll spend quite a few evenings and weekends doing your homework. You’ll want to look at as many mortgage providers as possible, find out what the likely criteria is for being accepted, whilst trying to find a reasonable interest rate. You’ll also have to decide on the type of mortgage you think is right for you. Is a fixed rate best for you? If so, over how many years? It will take time to learn about each type of mortgage before you can make an informed decision. Think of it as an exam. If you don’t spend the time revising, you won’t get the result you want. Add to this that the mortgage market is in constant flux, with lenders pulling mortgage products, adding new products daily. You may feel that you’ve no sooner understood the mortgage market, and it’s changed again. It may start to feel a little like Groundhog Day.
Application Approval
Applying directly to the lender for your mortgage may feel like a quicker route to getting your application approved. However, mistakes on your application, missing documentation or errors on your credit history will all impact whether a lender approves your application. If your research isn’t complete, you may even have applied to a lender who, based on their underwriting and loan terms, just can’t approve your application. Being declined for a mortgage is gut-wrenchingly disappointing. It holds up the buying process at best and could detrimentally affect your credit score. It could even see your dream home slip through your fingers.
Money
Lenders are looking for financially savvy borrowers. Unfortunately, the applications that get rejected are usually full of errors, backed up with a shaky credit history and trying to access mortgage products that don’t fit their needs.
If you don’t consider the whole mortgage market and then narrow down your choices, you will likely pay more fees and interest than otherwise. Being declined for a mortgage may negatively affect your credit rating, which in turn, could see you having to pay higher rates of interest than you were expecting. Over a mortgage term of 25 years, this will be costing you thousands of pounds.
Why choose a Mortgage Broker over a Direct Lender
Working with a qualified mortgage broker will save you time, as their experience and knowledge ensure they know which mortgages and lenders are most likely to accept an application based on your circumstances. Brokers may even have access to mortgage rates you wouldn’t be able to find otherwise. In addition, a mortgage broker will help complete the paperwork, check it for errors and ensure you have all the correct documentation before it is submitted. Working in this way reduces the risk of delays and enhances the prospect of a positive outcome. Although some mortgage brokers charge a fee, the money they can save over the lifetime of your mortgage by finding you the right deal is likely to be in the thousands.
What path are you going to take with your mortgage application? Are you going to go direct to the lender or work with a qualified mortgage broker?
Our CeMAP qualified brokers are ready to answer your queries, send them a message, or call 0800 1 777 333
