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Choosing a Mortgage: A Case Study

By: Emma Eilbeck BA (hons) - Updated: 25 May 2013 | comments*Discuss
Mortgage Lender Mortgage Broker

Finding a mortgage in the current economic climate is one thing, but finding one that matches your needs is a different matter entirely. The mortgage market is a minefield at the moment and it is hard to know where to turn.

Your First Steps

Jane was a first-time buyer, she had been saving for a couple of years and had received some help from her parents to raise enough money for a deposit. She had about £10,000, which she thought would be enough of a deposit to buy a one-bedroom flat in Manchester.

“I had a friend who was a first-time buyer and bought a house a couple of years ago borrowing 120% of the property’s value, I knew there was no way I would be able to do this anymore and that I would have to have at least a 10% deposit saved up in order to get a mortgage,” says Jane.

“I was confused as to where to look for a mortgage, I had been reading in the newspapers about all the different bank bailouts and I just wasn’t sure who was and who wasn’t lending anymore,” explains Jane.She looked online and on a few of the comparison sites, while they were able to give her some idea of what rate lenders were charging she found herself a bit confused by some of the jargon they were using and she decided to seek extra guidance.

Visiting A Mortgage Broker

“I thought one good way to compare all of the different rates on offer would be to go and visit a mortgage broker. I looked in my local yellow pages and found one that was offering free advice, so I called in for a visit.”

“I found the service very professional and the mortgage broker was able to sit down with me and look at all of my options. I originally had been quite keen to get a tracker rate because I thought with the low interest rate my payments could only go down.

However the adviser explained that a fixed rate might be my best option as many of the tracker rates were being capped by lenders, which meant they could not go down any further,” says Jane.

After going through all of her options with the mortgage broker she found a couple of good deals, but was quite surprised by what the adviser told her.

“The adviser was very honest and told me that if I contacted the lender direct they would be able to offer me a more competitive rate. He explained that since a lot of lenders are looking to curb their mortgage lending they are only offering certain deals through brokers and in this one occasion it would be better to visit them direct.

“I felt a bit sorry for the mortgage broker as he had been a huge help to me and he was not going to be able to sell me a mortgage, but I thought to myself that I will return to the broker if I ever need to remortgage in a few years,” says Jane.

Speaking To A Lender Direct

Once Jane knew which lender she wanted to get her mortgage from she telephoned them direct and they told her how much money she could lend and at what rate it would be. She already had a property in mind that she was interested in, so now she knew she could get the mortgage there was no stopping her.

“I didn’t find the process stressful, but it was quite tricky knowing who to turn to, I was pleased I had the advice from the mortgage broker and he led me to the bank. In the end I opted for a two-year fixed rate, so when that comes to an end I might re-visit the broker to see what he can offer me,” explains Jane.

The mortgage market has evolved dramatically over the past couple of years, some mortgage lenders have vanished from the market altogether while others are simply not lending. It is important to do as much research as you can and not simply choose the first deal that comes along.

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