How much do mortgage advisors charge?

Mortgage advisors charge fees in a variety of ways, so it is important ask them the question from the outset. Here are the different ways they may charge.

  1. Fixed Fee
  2. Fee Free
  3. Hourly Rate
  4. Commission
  5. Percentage
  6. Combination

There are, however, a number of different options out there so it is important to discuss these with your mortgage advisor first.

Fixed Fee

Your adviser will agree to arrange your mortgage for a fixed amount of money. This should be agreed in writing so there isn’t any room for dispute.

Fee Free

Not all mortgage advisors charge for their financial advice. At GIGLY, we only work with independent financial advisors who do not charge customers a penny for their service.

Instead of charging customers we get a percentage of the procuration fee from the lender if the mortgage goes through. It’s important to note, that all financial advisors get this fee, some just happen to charge an additional brokerage fee on top. Some advisors work on the basis they charge a fee but they refund the proc fee to the client (see Combination below).

Hourly Rate

Some advisers will charge per hour so you should have an estimate upfront of how long it is likely to take for the advisor to find you a mortgage and guide you through the application process.

Commission

All mortgage brokers receive a commission in the form of a procuration fee from the lender once a mortgage has completed. Fee free mortgage brokers use the procuration fee as their primary income source and do not charge an additional fee on top of the procuration fee. Make sure you ask about it right at the start and check if the broker you are talking to is on a limited panel or is whole of market.

Percentage

Some advisers will charge you a percentage of your mortgage. For example, if you agree a 1% charge for a £300,000 mortgage, the fee will be £3,000. Some advisers will cap fees to a certain percentage.

Combination

Some advisers will charge fees but still receive commission. Others will charge fees, but agree to cap them at a percentage of the mortgage.

There are a number of mortgage advisor combination fee options;

  1. An adviser will charge fees for researching the market and providing advice payable from the onset and receive a commission from the lender
  2. An adviser will charge a fee when you apply for the mortgage and then refund any commission they receive from the lender.
  3. An adviser will charge a fee on receipt of your mortgage offer and then refund any commission they receive from the lender.
  4. An adviser will charge a fee on completion of your mortgage and then refund any commission they receive from the lender.

How much?

As mentioned above, a mortgage advisors fees can be charged a number of different ways and are determined by the size of the mortgage. On average, mortgage advisors are generally paid around £500 – £600 for their fixed fee, with other costs – such as percentage of the loan added after completion.

When Do I Pay My Fees?

Mortgage advisors can be paid at different times. At your first consultation, they should thoroughly communicate with you at which point in the application process you are expected to pay and the exact costs.

Liability

If you have received advice from a qualified mortgage advisor and any such problems arise after this service and can be directly linked to the broker’s service, you can be confident that the liability will not lie with you.

Ultimately, this is why it is so important to use a mortgage advisor when applying for a mortgage. Their advice and experience are invaluable. Always check with any broker you are considering using how much you will be charged and make sure you have this information in writing before you proceed.

Read our blog on 9 reasons to get independent mortgage advice.

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How can I improve my credit score?

Before applying for any mortgage, you should always check your credit report carefully, to establish if there is any reason why your application could be refused. You can obtain a copy of your report from a credit rating agency – the major ones include Experian, Equifax and CallCredit.

If you don’t like what you see, it’s not a disaster. There are ways you can improve your credit score, giving you a better chance of having a mortgage application accepted. We’ve put together three high impact areas you should focus on if you want to improve your credit score.

1. Pay Your Bills On Time

Lenders don’t like to see late payments as it might suggest that you are unable to successfully manage your current finances and therefore aren’t able to cope with further debt in the form of a mortgage. If you can pay off any payments before you apply for a mortgage, then do that!

2. Close Unused Accounts

Make sure to close any unused accounts that could be charging you unnecessary fees. Lenders will view old accounts as credit which is still available to you, and this might affect your ability to get new deals. Checking your credit report will help you to identify any accounts you may have forgotten about.

3. Get On The Electoral Roll

Being on the electoral roll provides valuable proof of your address to lenders – it is evidence of where you live and how long you have done for. Remember, lenders want to be reassured that you can pay them back and a stable living environment does just that. You can register at www.aboutmyvote.co.uk

Why A Credit Score Is Important

Having a poor credit rating isn’t the end of the world and certainly doesn’t mean you can’t get a mortgage, it does, however, make things slightly more challenging but there are lenders who are prepared to help those who have been rejected elsewhere. (Contact us for more information)

Banks and building societies want to be reassured that you will be able to pay back the loan so often comb through applicant’s financial history very carefully. They are looking to see if you have defaulted on any previous payments and often their offer will be determined on the following factors:

  • Credit report
  • County Court judgements
  • Any bankruptcy proceedings

If any of these scenarios apply, the chances are you won’t be eligible for most mortgage deals, or you will have to pay a higher rate of interest – even if your financial problems occurred a long time ago.

Remember that certain simple oversights, such as not being registered on the electoral roll, or failing to close credit card accounts that you no longer use, can have a negative impact on your credit rating.

 

Photo by Clique Images on Unsplash

What Documents Do I Need For A Mortgage?

When applying for a mortgage it is a good idea to sort out all the paperwork you’re going to need ahead of time. We’re not going to lie – it’s a pretty boring task, but the quicker you get it over and done with, the quicker GIGLY can deliver your mortgage and you can move in to your dream home!

What you will need will depend on your specific circumstances and the lender you are going through. The GIGLY checklist is however, a good starting point from which to build on.

Identification

GIGLY carries out electronic identity checks on each applicant, but all mortgages require you to provide proof of identification and address. This is to prevent sneaky money laundering schemes. You have to show a current, valid original document – not a copy or expired version. Below are some examples of what counts as valid identification.

Photographic ID

  • A valid current passport
  • A valid photocard driving licence

Proof of Address

  • A utility (gas, electricity, water, etc) bill that is dated within the last 3 months. Note – lenders, do not accept mobile telephone bills
  • Your council tax bills for 2017/18
  • A bank statement dated within the last 3 months

Show Where Your Deposit Is Coming From

All lenders need to see where your deposit is coming from, whether it’s from your savings or a gift from someone else. Proof should be presented in the form of bank statements, lenders can be very fussy as to how these statements are presented so we recommend scanned copies that include your name and address.

You can find your bank statements by logging into your online banking and clicking ‘statements’ from the menu.

Documentation

Each mortgage is unique and will require specific pieces of evidence, so we have listed the necessary documents below dependent upon what type of work you do, and what mortgage you are looking for.

Contractor

  • A copy of your current contract
  • Three months worth of personal bank statements
  • Proof of Deposit (Bank statement showing the funds to use)

PAYE

  • Three months of payslips & your latest P60
  • Three months worth of personal bank statements
  • Proof of Deposit (Bank statement showing the funds to use)

Self Employed/Freelancer

  • SA302 & Tax Year Overviews for the last three years (Documents produced from HMRC which confirm the applicant’s taxable income for each tax year). The tax year ends 5th April each year so for mortgage applications we now need documents for 2015 – 2017
  • Three months worth of personal bank statements
  • Proof of Deposit (Bank statement showing the funds to use)

Zero Hours Contractor

  • You must have been in your current position for a minimum of twelve months and able to provide twelve months worth of payslips (or fifty two weekly payslips if you are paid weekly)
  • Three months worth of personal bank statements
  • Proof of Deposit (Bank statement showing the funds of use)

So there it is – the documents you’ll need to provide to get a mortgage. Time to start rummaging through the filing cabinet!

 

Photo by Florian Klauer on Unsplash

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