Looking at the bigger picture

Sometimes it’s necessary to go back to basics in order to see the true essence of what a subject is about, without getting bogged down by all the particulars. Rebekah Commane looks at why we should focus on the endgame when starting to look for a mortgage

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The mortgage industry is certainly one that appears to get more complex by the day; it can be difficult enough for those working in the sector to get their heads around, let alone for consumers.

With all the various schemes, data, analysis and talk of bubbles and crashes, the crux of what mortgage procurement is all about can get lost among the abundance of jargon.

Of course, for most, a mortgage is simply a means of financing the purchase of a home, be that for the first time, to move home, or to invest in a buy-to-let property.

The majority of consumers looking for a mortgage really just want to know how much they can borrow, how much their fees will be and basically, what they’ll be paying each month.

Homeownership
The reality is that few of us would ever own our own home without the assistance of a loan, so while it can be seen as a massive burden to take out a mortgage that may require a large chunk of your income to repay for years to come, it’s the only way that most will ever own a property that is 100 per cent theirs.

Owning a home is a rite of passage that most of us aspire to. It provides a sense of stability and, while you’ll obviously be paying back your loan with interest, a property can be a valuable asset and something tangible that can earn you money, rather than pouring your income into the black hole that is renting.

There are common perceptions out there that mortgage lenders, i.e. banks and building societies, are cunning, money grabbing ‘bankers’. Of course there have been many incidents in the past that have left consumer trust of the financial industry as a whole in a dire state. However, in reality most lenders are not ‘out to get you’. They are simply there to provide a service, as with other businesses. And even if they wanted to pull a fast one, regulation of the financial services industry is now one of the most stringent of any sector.

Mortgage Market Review
The Mortgage Market Review (MMR), which came into effect in late April last, received a lot of negative press as it means applicants have to go through more rigorous affordability checks which draw out the process for consumers. But the new rules are for buyers’ own good and mean that a bank can’t lend you more money than you can afford to pay back. If you can’t get a mortgage under the new MMR conditions, you probably shouldn’t have one.

Be aware that the MMR is not an effort to hinder your path to homeownership. It’s the Financial Conduct Authority’s (FCA) latest method of monitoring lenders and ensuring that they can’t hand out mortgages to borrowers who could end up with insurmountable debt.

Don’t start off your home buying journey expecting the worst from the banks and the process overall – it will ruin your experience of purchasing a property, which should be a happy one, before it’s begun. At the same time, don’t go about it naively. While the essence of what a mortgage is and why it’s needed is pretty clear, there is a lot to consider and that’s what mortgage advisers and solicitors are there for.

Make sure you consult a qualified, reliable mortgage adviser and employ a solicitor you trust and this should make the home buying process a more transparent, smoother ride.

Government schemes
Also, don’t dismiss the government schemes that can help you get a mortgage if you don’t qualify for one by standard measures. The obvious scheme is Help to Buy, which has garnered much media attention, but there are also other home buying assistance schemes like shared ownership and right to buy that can get you on the housing ladder if you fulfil the criteria.

When it comes to beginning your home buying journey, focus on the positive. There are so many products out there and new, low rates are being introduced to the market constantly. Remember that you don’t have to get your mortgage from the bank or building society you currently use. There’s a reason why the advice to ‘shop around’ is used ad nauseam; it’s one of the most valid pieces of advice that can be given to mortgage hunters.

The very best of luck with your home buying journey!

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