Types of Mortgage

The range of different mortgages has increased too, so that you now have a surprisingly wide choice. But not all lenders promote the full range, and unless you ask you might not be offered some of the more unusual types of mortgage. Lenders offering to arrange insurance or pension policies linked to your mortgage are covered by the Financial Services Act, and must either be selling the policies of just one company or must give you completely independent advice - and they must make clear which they are doing. If they are independent, they must offer you the policy which is best for you.

WARNING Under new rules proposed by the Securities and Investments Board, independent advisers will be allowed to survey the market at intervals and pick the best policy to suit a particular group of customers - for example, those seeking endowment mortgages. This means that the policy chosen might not in fact be the best for you personally.

WARNING If you go to an insurance company for a mortgage, they'll probably insist that you take out one of their endowment or pension policies to go with the mortgage. Many other lenders have ties with insurance companies and may be keen for you to link your mortgage to an endowment policy because they earn commission on the sale of the policy. Consider other types of mortgage too and only choose a pension- or endowment-linked mortgage if that's really best for you.

TIP - If you have trouble finding a mortgage - for example, you need an especially large loan, or for an unusual property, or you can't find the type of mortgage that you want - you could go to a mortgage broker. They survey what's on the market and shop around for you though some are tied to just a few lenders and won't check the whole market. Some mortgage brokers even have their own tailor-made schemes. But check how much the broker will charge you - one or two per cent of the value of the loan is common though this may be reduced by the amount of any commission they get for arranging an insurance or pension policy to go with the mortgage. If, within six months, you don't take up a mortgage arranged by the broker, or no mortgage offer is made, the broker is entitled to a fee of only £6 - as long as you wanted the mortgage to provide a home for yourself or a relative. You may have paid a fee in advance; if so, you can reclaim it, less the £6. Mortgage brokers advertise in the press, or you can find one through a trade organisation, such as:

Corporation of Insurance and Financial Advisers 6-7 Leapale Road, Guildford, Surrey GU1 4JX Tel: 0483 39121

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Finding a mortgage

Buying your own home is likely to be one of the biggest purchases you'll ever make, and most people borrow to make it possible. Ten years ago, your mortgage would nearly always have come from a building society but today only around 60 per cent come from building societies; the rest are from High Street banks and other new lenders, such as foreign banks, insurance companies and specialist mortgage companies. And gone are the days when you had to be an existing saver in order to qualify for a loan. The mortgage market is very competitive and it pays to shop around for the... see: Mortgages

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