The man with the money plan
With house repossessions on the increase, Independent Mortgage Adviser Dave Wright from Burnley says there is help out there!
Independent Mortgage Adviser Dave Wright from Burnley explains how his job has changed over the last year, how long he thinks the recession might last, and what you can do if you're starting to struggle to pay your mortgage...
How did you start in the world of finance?
I began life the Finance Industry in 1998 when I joined Britannic Assurance as a Trainee Financial Adviser.
I'm now an Independent Mortgage Adviser and offer mortgage advice from the whole of the market. I also offer advice on a range of Insurance products such as Life Insurance, Payment Protection and Household Insurance. Increasingly I am also diversifying into Debt Management in order to help those that feel that they really are running out of options to deal with their finances.
What qualifications do you need?
I have the full Financial Planning Certificate (FPC 1,2 & 3), Mortgage Advice Qualification (MAQ), I also have CF7 which allows me to give advise on Equity Release mortgages, sometimes known as Lifetime Mortgages. Qualifications are a necessity in this sector and it is important that I as an adviser keep up to speed with the regulatory changes as the qualification requirements are regularly updated.
Why should someone use a mortgage adviser? Does it cost?
I believe that Mortgage Advisers and indeed any type of Financial Adviser have a very important role, especially in the current economic climate. I find that many of the people I speak to believe that they can get all the information they require just by ‘surfing the net’. However, having tried this myself it is clear that much of the information published on various websites is either out of date, or doesn’t explain the full criteria of the product being researched. I believe also that an Adviser can also help their client think more about what would be the most appropriate solution. For instance, when it comes to mortgages, the lowest interest rate might appeal most to the client, however, if this client has lots of disposable income and plans to regularly overpay on their mortgage, then a deal with a higher interest rate may work out to be better value over the term of the deal. With regards to my fees, I never charge for an initial consultation and it is rare that I would charge a fee if I proceeded to give you advice. I do reserve the right to charge a fee but this is usually when the client requires specialized advice beyond that of a basic mortgage. I do however, always declare up-front if the client will be liable to a fee.
How do people react when you tell them what you do?
I think many people have a rather negative image of Financial Advisers in the same vein as Estate Agents or Tax Inspectors maybe! I like to think though that many of my clients have warmed to me as I try to make them as relaxed as possible by visiting them in their own homes and discussing things over a cup of tea and a biscuit – indeed some of my clients get me to stay for dinner after we have dealt with their finances! Many may see the job as being dull but I guarantee you that if you are ever in a half full pub or restaurant you will always overhear somebody talking about their mortgage. On a couple of occasions I have even gone on to get business by chipping in to somebody else’s mortgage conversation!
What's the best bit about your job?
It sounds a bit cheesy but the people I meet make my job so enjoyable. I deal with clients from all walks of life and I never get tired of listening to their concerns and hopefully guiding them along a route that will improve their individual lives in one way or another.
And the worst?
Nothing. I LOVE MY JOB! There are no bad bits.
How easy is it to get a mortgage now? Has it got easier or harder over the last 12 months?
Obviously, the "credit crunch" has had a massive impact on the mortgage industry. It has definitely got harder and harder to place an application over the last twelve months! The ease of getting a mortgage varies massively depending on your particular circumstances. For instance if you are buying a house with more than a 25% deposit then the deals are very easy to find. Anything less than 25% though and the options become much more limited. As such this is reducing the number of first time buyers that are entering the market. When it comes to remortgages, again there is a market depending on your circumstances but it has become increasingly common for it to be the best advice to just stay with your existing lender.
What part of the small print should people check carefully?
I think that there are three main areas that people should check: 1) the cost of redeeming the mortgage and the duration that these penalties will apply; 2) the total fees being charged by the lender. Arrangement/Admin/Booking fees that could be added to the final loan are typically anywhere between £Nil and 3% of the mortgage balance which could be a few thousand pounds! Again this could be an example of where it is worth paying a slightly higher interest rate in order to avoid these fees; and 3) this applies mainly to people on Bank of England Tracker deals. Many offers had a caveat in the small print that meant if interest rates went below a certain rate then the lender needed to offer the related tracker rate to their clients. This is particularly relevant while rates are as low as they currently are.
More people are taking out redundancy insurance - is it a good idea? What are the risks?
There has been a big increase in the enquiries I have been receiving for Unemployment Protection. Obviously this is down to the increased uncertainty in the employment sector. It is a very good idea to have this cover, however because of the current situation, premiums have increased by about 50% in some cases. Also when you apply for one of these products, you have to declare whether there have been any redundancies announced or whether there is any indication that redundancies could be on the horizon. I feel that there could be some very unhappy people in the months to come who think that they have protected themselves but when they come to claim on their policy they may not get the money they were hoping for. In the mean time I would always recommend that individuals have an ‘Emergency Fund’ put away that would cover your outgoings for up to say three months.
How low do you think interest rates on a mortgage could go?
Well history shows that whatever happens in the US tends to happen over here too. As such 0% Bank of England rates have got to be a possibility. However, I don’t think that the banks can necessarily continue to keep passing on these cuts and there may be a point in the near future where they say they have reached their bottom line
Would you advise people to try and pay off more while the rates are low if they can afford it?
Definitely, even if you are restricted with early repayment penalties. Given the current low rates, it is a remarkable opportunity for those of us with spare cash to make a significant dent in our mortgage debts
What advice would you give to anyone struggling to pay their mortgage?
Speak to somebody! Ignoring the problem won’t make it go away. If you don’t know a Financial Adviser try and get a friend to recommend you to one. Speak to your local Citizens Advice Bureau. Alternatively visit www.cherryfind.co.uk This is a website with a national database of advisers who have committed to adhering to the highest standard of business ethics and to provide impartial advice that is wholly focused on their clients needs so that they get the right products and levels of service.
You're regulated by the Financial Services Authority - how does that protect clients?
Regulation by the FSA has had a positive effect on our industry in that it has been standardized. Because of this you should be confident that the adviser is qualified to give you any advise; you should understand exactly what level of service you can expect from the adviser; all fees charged will be made transparent; and you can be reassured that you are protected by the Financial Services Compensation Scheme (FSCS).
How has your business been affected by the "credit crunch"?
Mortgage businesses have been seriously affected. I think our sector has been feeling the pinch considerably longer than the rest of the market and likewise the rest of the market will need to recover before mortgage businesses start to prosper again. I would say that I am doing about 25% of the mortgage business that I was doing about twelve months ago. Every cloud though, has a silver lining! And with the downturn, I have seen a big increase in enquiries for Debt Management. Sadly, I think this will continue until at least the back end of 2009 and probably the middle of 2010 before we see the signs of a recovery.
What do you think the government and Bank of England could do to help?
I think that there should be more help for first time buyers, either by way of grants or interest-free loans to finance their deposits, or by more widely available Shared Ownership/Equity Schemes. Also, I think that there needs to be more assurance for people who are struggling to repay their mortgages. One of the main reasons that we are in this mess is the fact that the powers that be were too slow to react to the market conditions that were developing 12-18 months ago. It is imperative that no further time is wasted in bureaucratic discussions and that positive action is taken immediately.
last updated: 27/05/2009 at 08:13
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