Mastering mortgages: navigate the market with confidence and clarity

Securing a mortgage is a significant financial decision that requires careful planning and consideration. Our experts Matthew Cuoghi and Chris Hallam address the crucial aspects of the mortgage industry in our recent webinar. In the webinar, they discuss the impact of high inflation and rising interest rates. Whether you are a first-time buyer or looking to re-finance, understanding the intricacies of the market is essential.

In this insight, we have collated the expert tips from our webinar to help you make effective and informed choices that align with your financial goals.

1. Accessing the whole of market is crucial

Ensure your broker has access to the ‘whole of market’ so they can explore all lenders and products available as opposed to a closed panel or just your own bank. A diverse range of options ensures you find a mortgage more tailored towards your specific needs and preferences, leading to better terms and rates.

2. Packaging a complete mortgage application

When applying for a mortgage, submitting a fully packaged application is key. You need to ensure you provide only the necessary documents required by the lender, as this helps avoid delays and increases the chances of approval, be it for a residential mortgage, buy-to-let arrangement or commercial finance.

3. Strategic timing for a mortgage review

Planning is vital when reviewing your mortgage. Start to review the process one year before your current mortgage ends, with a minimum of six to three months. This allows sufficient time to explore all options to make the best-informed decision.

4. Securing a new mortgage product in advance

Consider securing a new mortgage product 12 to six months ahead of your current rate ending. Doing so helps to avoid potential interest rate increases while retaining the ability to secure a new product if interest rates fall.

5. Balancing short and long-term mortgage payments

Ensure the short-term mortgage payments are manageable while considering the longer-term impact and your wider financial goals. Striking a balance between affordability and overall financial security is crucial.

6. Temporarily adjusting mortgage terms

If you are faced with rising interest rates, consider adjusting the mortgage term temporarily to help manage the monthly cost. This strategic approach can help you alleviate financial pressure until the interest rates stabilise.

7. Exploring interest-only mortgage options

For immediate affordability, explore moving part or all of your mortgage to an interest-only basis. This allows you to pay only the interest in a certain period which reduces monthly payments. However, this may have long-term implications so please ask for advice before doing so.

8. Opting for variable rate mortgages

Consider the potential use of a new variable rate mortgage product without early exit penalties to avoid your lender’s upcoming standard variable rate. This gives you the freedom and flexibility to switch to a fixed rate if the interest rates decline in the future.

9. Understanding the benefits of an offset mortgage

An offset mortgage product allows you to maintain the liquidity of capital while employing the funds to reduce the monthly mortgage cost.

10. Joint-borrower sole-proprietor mortgage arrangement

A joint-borrower sole-proprietor mortgage arrangement effectively acts as a guarantor. This can be an excellent option for lower earners or first-time buyers to help them secure an otherwise unobtainable mortgage.  This arrangement may increase the likelihood of a mortgage approval.

11. Significance of credit history

Lenders consider the ‘depth’ of your credit history when evaluating your mortgage application. This includes:

• existing borrowing
• keeping credit card usage below 80%
• new added debt and
• history of gambling on your bank statements.

Maintaining a healthy bank statement can positively influence the lender’s decision.

These points are all addressed in our webinar here. We understand that navigating the market can be complex but we hope, with these expert tips, you can make well-informed decisions that align with your financial objectives. Our experts are always available to discuss the options that are best aligned with your financial goals, and you can contact us here.