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Independant Financial Advisor - Advantages & Disadvantages
Mortgage Financial Advisers
Many house buyers tend to be sceptical and perhaps a little bit shy when it comes to speaking with a financial adviser, but in this article we will take a look at whether or not it could be beneficial to consider a financial adviser for the purchase of a house. Financial advisers are in a position whereby the customer invests a lot of trust into them and therefore it's very important that they are operating for the customer and not entirely for themselves.
A financial adviser should be scouring the market for you, looking for the best deals. Therefore in turn saving you money, and making some commission from the banks, insurance companies etc for putting you their way. The financial adviser will be there to chase up any issues you have with the mortgage going through. He should find you solicitors that he recommends and follow up constantly to make sure everything is going smooth. This is a huge weight from your shoulders. The finiancial advisor will scour the country if needed to find you the best options and result, whereas the estate agent won't.
There are different types of financial advisers. Some will ask for a fee upfront whilst others do not. Why is this? Financial advisers are working people and it goes without say that they need to make money doing the job. Financial advisers that ask for money upfront can sometimes be the better option as they are more likely to act in your best interests. A financial adviser that does not ask for money up front, will act in your best interests to an extent, but we must also recognise that in order to make it worth their while they will be tempted to lure you into a mortgage whereby they can make the highest amount of commission. Some mortgage companies will not deal with financial advisers and therefore these will not be brought to your attention at all, even if they are offering the best deals.
How it works
Mortgage Financial advisers generally have software that allows them to show you the best deals on the market at the present time. They can advise you on the best options for you based on your current situation and they have the ability and knowledge to save you a lot of money further down the line.
In 2008 I used a financial adviser who was recommended to me by a friend of the family. At the time I was grateful to have been introduced to someone who could be trusted and was highly recommended. There was no fee with this financial adviser, which I was also pleased about. The financial adviser showed me the options on the market and advised me to opt for a 5 year fixed rate mortgage with the lowest interest rates. I was happy to know that I was being advised by a professional and naturally followed his lead. The first year was great, but then the interest rates started to drop very quickly. By the end of my 5 year fixed mortgage I had paid £18,000 in mortgage repayments than I would have done, had I have opted for a variable mortgage option.
No-one has a magic wand - including the financial advisers, but when I look back it's easy to see that I was talked into a 5 year fixed mortgage because the commissions were going to be far greater for my adviser, than if I had of opted for a 2 year mortgage or went variable.
My second time around using a financial adviser was a totally different experience. This financial adviser requested an initial fee, but did not disappoint. Not only did he get us an excellent deal and save us a lot of money, but he also took care of a lot of the mundane paperwork and correspondence between us and the estate agents. He was proactively chasing the estate agents for us and talking with solicitors to get the chain pushed through as quickly as possible. I would use him again and I regularly recommend him to friends and family.
Although much of the information is readily available on the internet, it is always worth consulting with a financial adviser when making a purchase on a house. A house is likely to be the most expensive that anyone will make in their lifetime, and a mortgage is also the biggest loan that most people will ever have to their name. When you consider the amount the amount of money and risk involved it does make sense to talk to a professional that specialises in this field and also in finance.
Don't be put off when a mortgage adviser asks you for a small fee upfront. The fee in comparison to your mortgage could be looked upon as peanuts. A mortgage adviser who is charging a fee is more likely to be acting in your best interests and will be able to offer you the best advice, without solely relying upon your purchase to fund his or her pay cheque.