The objective of every homeowner is to reduce monthly repayments by signing-up to the best mortgage deal. With literally hundreds of products available, homeowners are increasingly reliant on mortgage advice from experienced advisers. Homeowners regularly fail to take into account the mortgage fee associated with professional advice and how this will affect their repayments.
What Does Mortgage Advice Involve?
The relative complexity of financial products makes mortgage advice essential for inexperienced homeowners, especially first-time buyers. A broker will trawl the entire market for the best mortgage deal that is applicable to their client's personal circumstances. Mortgage brokers have access to useful industry contacts that can help reduce home monthly repayments.
The provision of mortgage advice isn't a free service and will incur a fee that is typically 1 per cent of the loans total value. All homeowners must factor-in the cost of a financial professional when determining the net saving on their new home loan.
How a Mortgage Broker Affects Monthly Repayments
The Jones family have sought mortgage advice from a financial professional in respect of their £125,000 home loan. They are on a fixed income and are concerned about rising mortgage repayments. They are currently paying a standard variable rate (SVR) of 7.25% APR; this consists of making repayments of £914.08 pcm over 25 years.
The advice received from their mortgage broker involves taking out a 3 year fixed-rate deal at 5.5% APR over 25 years with monthly repayments of £776.56. This is to provide the Jones family with stability in light of their fixed income and also to take advantage of the climate of low interest rates.
The Jones family are now paying £137.52 pcm less. However, they have also paid a total of £1,250 in fees for the mortgage advice received; this is the equivalent of £34.72 pcm. Even after taking into account the cost of a mortgage broker, they are still £102.80 pcm better-off. If this is genuinely spare cash, their adviser may suggest that they reduce the term of their loan from 25 to 20 years.
Is an Online Mortgage Comparison Service Worthwhile?
Whilst mortgage advice is convenient, homeowners are often put off by the associated cost of quality advice. An online mortgage comparison service is a way of reducing repayments without incurring any further fees. A site, such as moneysupermarket.com, allows a homeowner to search the market for the best mortgage deal. There is no advice available, but it helps pinpoint the better options out there.
A homeowner should use an online mortgage comparison service to help reduce their monthly repayments. Self-employed people, first-time buyers and adverse credit customers are likely to benefit from mortgage advice from an experienced financial professional.
Homeowners seeking to minimise mortgage repayments may wish to read about tracker mortgages, fixed-rate mortgages and discount rate mortgages.
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