By: Andy Booth, Head of Local Markets, Barclays Wealth
I often get asked whether a fixed or tracker rate should be taken in the current climate and the answer is never the same. It’s never the same answer, because it depends on the circumstances of the person asking the question.
All too often we consider one element of a mortgage but not the suitability of the facility over a longer term and this can be an oversight which may prove costly over time.
It is therefore important, in my opinion, to gain professional advice whenever you take out a mortgage and whenever that facility is reviewed.
Let’s put this into context. When we look for a home, we all have different needs; it may be the location, the number of bedrooms, the style and size of the garden, the list goes on. But we look for these features because of the benefits they bring to our lives. A new home will allow us to grow in comfort, retain our lifestyles, provide a home for our children to grow and again, the list goes on.
When we undertake this process, we tend to consider many options and we take views and advice into consideration. The viewings of the property will sometimes be multiple, but that is to help us to confirm that we are making the right choices. The negotiation of the sale is to ensure that we get value for money. The property survey is to ensure it is of a sound structure and provides us with peace of mind, but do we do the same for the finance that secures the property? After all, for many people this is the single most expensive financial commitment and one that exists for many years.
I don’t believe that we always do.
Having been in the mortgage industry for the last 20 years, I have seen and experienced the highs and lows of mortgage interest rates. Some may forget that in 1989 the Base rate was at 15% and it is only the last year or so that is has been at the historically low level of 0.5%. For some people, it may be prudent to consider the option of securing a longer term fixed low interest rate now. However, there are other elements to consider. Where does this property fit into your wider plans in life? If it is a stepping stone, then you may need the flexibility in your mortgage and to transfer it, free from charges, to a larger property down the line. You may be looking to have a family or have a planned expense in the near future and so, being able to budget may be a priority. You may want to pay lump sums to the mortgage every year without being penalised for making overpayments. Whatever your plans are, you need to ensure that the mortgage meets your needs now and in the future.
I believe that the best way to understand the complexities of a mortgage facility is through professional advice. It is a qualified adviser’s job to pose questions that you may not even have considered. A professional mortgage adviser will help you consider your financial objectives and how you can ensure you’re moving towards them with the financing of your property. It’s important to get first class advice, after all, you don’t buy a house every day.
One thing is clear though, you should always allow time to discuss the solutions. Be curious, ask questions to ensure that you fully understand the proposals. Treat the selection of finance like finding the property, look at it, then look at it again to be sure of what you are doing.
The Financial Services Authority is looking closely at how mortgage advice is given in the UK and there are proposals are in place to increase accountability in providing advice. If you want to discuss your existing mortgage or are thinking of buying a new home, then a Barclays Wealth mortgage adviser is well placed to provide you with professional advice. Each adviser is qualified to the same standards required in the UK and there are no obligations. All we need is an hour of your time to discuss your plans. After all, now could be a once in a lifetime opportunity to take advantage of such flexible mortgage offerings.
Barclays Private Clients International Ltd is licensed by the Isle of Man Financial Supervision Commission
