Mortgage advice is one thing, but getting good advice is quite another. In the UK, mortgage advisors are regulated by the FSA, an independent body, which sets out guidelines for them to follow. The FSA also sets out criteria for advisors to meet to ensure their services are of a high standard. In the US, on the other hand, the Federal Home Loan Mortgage Corporation regulates the mortgage industry, as well as the mortgage brokers who provide their financial advice and service to the public. There are also professional bodies in other countries, such as Australia, New Zealand and Singapore, which have specific regulation regarding mortgage advisers.
The FSA requires that any mortgage advice provided to consumers for mortgage application have to be skillfully skilled to an appropriate level. This requires an advisor to have a sufficient knowledge of financial matters relating to mortgages to assess accurately an individual’s credit situation and potential. This does not necessarily mean that an individual has excellent credit! If a mortgage adviser knows something about mortgages that an individual does not, the advisor cannot give correct or useful mortgage advice because the individual is not qualified to receive that type of advice.
An advisor also must offer accurate information and analysis that are impartial and based on reliable, up-to-date data. Mortgage advice is a very sensitive matter, so accuracy is paramount. Mortgage advisers must provide accurate up-to-date data that is current at the time of writing. Otherwise, a mortgage deal may be affected adversely.
A second important requirement of mortgage advice is that the mortgage adviser should offer unbiased advice. If they have a commercial interest in a particular mortgage deal or product, this should be declared up front by the mortgage advice provider. Having declared an interest in a mortgage deal could potentially have a negative effect on impartiality because the mortgage adviser will have a commercial interest in the success of the deal. However, a mortgage adviser’s impartiality can sometimes be enhanced by stating a competing interest. For instance, if the mortgage deal the adviser is advising on would not be likely to be successful if there were rises in other interest rates, the mortgage advice provider may point out this fact and thus help to enhance the individual’s chances of getting the best mortgage deal.
A third requirement of mortgage advice is for the mortgage expert to undertake a “freeforclear mortgage assessment”. The purpose of this assessment is for the mortgage specialist to assess an individual’s capacity to meet their existing mortgage repayments over the long term. Although every individual is different, there are some general rules that can apply when taking into account a freeforclear mortgage assessment. These include: whether an individual is able to keep up with repayments over the long term; whether an individual would have sufficient resources to pay off their mortgage; and what the implications of leaving debts unpaid are likely to be.
It may sometimes be necessary for a mortgage specialist to seek further information from the borrower in order to complete their analysis. Most providers of mortgage advice provide a freeforclear mortgage calculator online that allows the borrower to calculate their monthly costs in the future. The mortgage calculator can then be compared with those set out by their freeforclear mortgage expert. However, just because a mortgage expert gives the mortgage advice provider the final figure does not mean that the borrower must go ahead with the deal. In the case of a commercial loan, it may be necessary to wait until the end of the term in order to find out if the mortgage deal is still viable.