Do you know how to use your Bonus Income to buy a Property?

When looking to secure a mortgage, it is natural to want to shop around to ensure you’re getting the best deal.

There is a vast number of lenders, including high street, private and investment banks, private investors and specialist lenders, as well as a wide variety of products available, so navigating the mortgage market can be a challenge. Add to that time pressures and it can be confusing knowing which lender is the best for your circumstance.

As such, research is key and we encourage borrowers to explore a variety of avenues; we always make sure our clients have approached their own bank as well as us and expect clients to conduct their own research, so they have an idea of their options from the outset. A mortgage is likely to be the largest and most important loan you will take out so it is important to explore your options.

As mortgage brokers, we appreciate that along with being exciting, the property-finding and mortgage-sourcing period is all-consuming and exhausting. For that reason, we always want to make our clients aware of how to make their plans as cost-efficient and affordable as is possible and to make sure that we are clear from the outset about the best way to make that happen.

However, we advise our clients not to speak to more than one mortgage broker, particularly if plans are complex, the boundaries are being pushed or time is scarce. The main reason why we advise not speaking to more than one mortgage broker is to make sure the market isn’t muddied, and your options are not restricted by a lot of people working on your behalf. Here are some examples of what I mean:

It’s a small market (if you pick the right broker)

Mortgage brokers typically fall into three categories:

  • ‘Tied’– they only work with one lender, bank staff for example
  • ‘Appointed Representatives’– they work with a fixed panel of lenders
  • ‘Fully Independent’– they work with an unrestricted number of lenders

There is also a set of brokers called ‘whole of market’ which doesn’t mean what it necessarily implies as they only have to be ‘representative’ of the market, rather than truly unrestricted.

You can tell which category a chosen broker fits into by looking at their fee structure; no broker fee, or a low one, usually means the main income per mortgage will be commission from a small panel of lenders. You can differentiate between these categories by reading the small print and the documents issued when you first speak to them, sometimes called a Combined Initial Disclosure Document.

As a general economic principle, the more lenders a broker deals with, the more likely they are to be able to find a solution and the better your terms should be. There are very few firms who are truly independent, not tied to a parent company, and who genuinely have unlimited access to the market.

If the above is followed, you will be speaking to a genuine expert, in whose best interest it will be to offer a good service from start to finish.

Too many cooks spoil the broth

If you have found a number of brokerages who you think suit your circumstances, it’s wise to choose one to progress your case, rather than working with multiple brokers. Not every broker will understand your situation in the same way; some things are subjective, others are open to interpretation. Therefore, there are many contrasting ways in which applications can be presented, and there are different people to speak to within individual banks.

Banks are, as you may know, political places. They need to be presented with the proposal and the solution but they are easily spooked by too much, the wrong or conflicting information. This means that if a lender is presented with:

  • Two different versions of your circumstances
  • Different descriptions of your intentions for the property
  • The same proposal via multiple sources
  • A credit report showing multiple recent searches against you
  • Anything else…

It is entirely possible that they will either run a mile, refuse to work on the case anymore, interpret the facts unfavourably or, in extreme circumstances, suspect fraudulent activity. The latter is especially true of online processing where two applications with slightly different income details for example could set off anti-fraud software.

In effect, this could ruin your chances of securing any finance from the lender or, at least, slow down the process until the confusion is resolved.

Presentation is key

In the current market, how a case is presented to a lender is almost as important as the facts of the application. Lenders are busy and time is limited, so the ability to think and decipher is in short supply. As such, lenders need a solution, rather than a problem.

This also demonstrates how important it is for your broker to take the time to understand your situation, is skilled enough to work out a solution, is connected enough to take it to the right bank (even if it’s one they will use only once a year) and is respected enough for that bank to want to work with that broker.
With all this in mind, and as I am sure my colleagues at other top firms will agree, it’s going to be better for you if you do your research, understand the firms, options and solutions available to you, and then pick the one you trust to work on your behalf, rather than have more than one firm working at the same time.

Please get in touch with our team to find out if Enness is the right brokerage for you, we would love to hear your situation and see if we can help.

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