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What Is A Mortgage Lender?

Feb 4, 2008
In the UK, there are many different types of mortgage lender, each offering something different from the other. This choice has led to a lot of confusion on the part of anyone looking to buy a house, especially since it's so important to get your decision right first time.

Contrary to popular belief, a mortgage lender doesn't just give you the money for your house and that's it. They also offer a wide range of services and advice that can help you choose what package is best for you. There are even specialist lenders that deal solely with poor credit, offering a mortgage to those who'd otherwise be turned down. The main types of lenders in the UK today are:

Banks and Building Societies

Arguably the most common or popular source for homebuyers is their bank or building society. This is more down to the ease-of-use than anything else - after all, most people have loans or credit cards through their banks, and so it seems a natural choice for them to take care of your mortgage as well. However, this can limit your choice when it comes to different rates and mortgage types, so it's not always the best option.

Specialist Mortgage Lenders

One area that has really grown in the last 10-15 years is that of specialist or independent mortgage lenders. These can be online companies, or other financial institutions that now offer mortgages - for example, insurance companies now offer homebuyers the option of taking out a mortgage with them, as do estate agents.

The benefit with taking this approach is that you can find a far greater range of mortgages available to you, from buy-to-let to longer repayment times. They can also offer more flexibility when it comes to changing your mortgage throughout the repayment period, whether it's for a better rate or to accumulate all your debt with one solitary lender. The online companies can even offer cheaper rates, due to the lack of overheads involved.

Lenders for Poor Credit Cases

One of the biggest stumbling blocks for anyone looking to buy a house is poor or bad credit. Yet with the majority of the UK in debt anyway, there are now more options available to people in this situation. Look at the back of most newspapers and you'll see adverts for companies that advertise with tags such as "Poor Credit - No Problem" or similar.

Whilst these types of companies are good news for people who'd otherwise struggle to buy a house, they do have their drawbacks. The main one is that usually their rates are a lot higher than the normal outlets, sometimes astronomically so. There have also been cases where people have been thrown out of their homes for missing a single payment, so make sure you read all the small print of using this type of mortgage lender. As long as you stay with an FSA-approved lender, there shouldn't be too many problems - a quick search online will be able to tell you which companies have this accreditation, and which don't.
About the Author
Choose the right UK Mortgage product and Mortgage Lender to suit your needs with http://www.ukmortgagesource.co.uk
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