What are the mortgage basics? - Step 3 Choose your lender

So, you should now have looked at the different types of mortgages you available to you and how interest is charged. You can now take this information and get your mortgage arranged. But who do you go to in order to do this? We will now take you through your options.

The basic choice of where to get your mortgage from is between the building societies, the banks, the insurance companies, specialist lenders or intermediaries.

Should you be looking for a traditional mortgage lender with many years of experience in the mortgage markets, then you should try a building society. This doesn't necessarily need to be a large society, you may find that your local society, whilst much smaller, has some good deals and low rates. However, these local societies also tend to only lend on properties in their local area.

Building societies are owned by their members, who put money in with their savings, and borrow money through loans and mortgages. This means that profits go to the members in the form of good deals, rather than to shareholders. This is what is known as mutuality.

High street banks are owned by shareholders, and are beholden to them, rather to their customers. But they are taking more of a share in the mortgage market and have a major advantage in terms of the number of branches that they have around the country. This means that customer convenience is maybe better. Some large building societies have recently converted to banks, so you can still have access to their mortgage expertise.

Then there are specialist lenders, who cater for specific parts of the market, such as the self-employed or maybe for people with bad credit. They do not have a high-street presence and operate usually from a single office, thus reducing costs, enabling them to provide mortgages for people for whom there may be little other option. You used to only be able to access the products from specialist lenders through intermediaries or broker, but now you can get a mortgage via the internet or over the phone.

Then, should you want to try and save time and money, you can go to a mortgage intermediary. This could be a mortgage advisor or a financial advisor. They will provide you with an overview of the market, enabling you to compare lenders and mortgages in order to find the best on for you. Intermediaries may be tied to one lender, or multi-tied to a few, or could be independent, in which case you have the whole of the mortgage market open to you. Brokers get paid in commission from the lenders, but they may also charge you up to 1% of the borrowed amount.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2009

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