What is a mortgage broker and do you need one?
A mortgage broker is an adviser that helps you get a mortgage. They find the right product for you from thousands on offer across the market.
Using a broker gives you a mortgage expert on your side. Brokers need to pass professional qualifications to give advice and they’re regulated by the Financial Conduct Authority.
They’ll also give you a realistic idea of how much you can borrow and therefore your purchasing power. And they’ll help get your finances ‘mortgage ready’ to give you the best chance of getting your application approved before finding you the best mortgage rates.
Will using a mortgage broker get me a better deal?
A broker will find you the best and cheapest mortgage that meets your needs.
It’s important to remember there isn’t one best mortgage. The lowest rate might not be accessible to you or come with high fees you don’t want to pay. A broker uses their expertise and experience to find the cheapest option that suits you.
David Hollingworth, associate director at broker, L&C Mortgages, explains: ‘There’s more to think about than just the rate as deals carry different fees and incentives, such as a free valuation or a cashback.’
‘A broker will factor these in to find the right blend, plus account for lender criteria to get the right fit for the case.’
Image credit: Future PLC/ Alun Callender
What’s the difference between a mortgage broker and direct lender?
A direct lender, such as a bank or building society, offers their own mortgages.
They can give you advice on their products, but they won’t tell you if a competitor’s mortgage could suit you better.
A broker works for you. They’ll do a detailed ‘factfind’ to get all the information they need. Then they’ll shop around, searching the mortgage market on your behalf.
Most importantly, they have inside knowledge of how lenders work. They know which are super smooth on service or running slow, and they stay up to date with constantly changing lending criteria.
They’ll find the best mortgage that you’re actually eligible for, so you don’t waste time on applications that get rejected and send you back to square one. Find out how much you could borrow with our mortgage calculator.
Are mortgage brokers independent or will they only offer mortgages from certain lenders?
Some are independent and can arrange a mortgage from any UK mortgage lender.
Others have access to a panel of lenders that represents the mortgage market, without including every single lender.
They are all bound by regulations so you can trust their advice and go to the Financial Ombudsman Service if you’re not happy.
Michelle Leyland, mortgage broker at South Yorkshire Money, says: “Ask a mortgage broker how many lenders they have access to. The answer should be 90-plus and then they are as close to ‘whole of market’ as you can get.”
How much does a mortgage broker cost?
Advice from a broker ranges from completely free to thousands of pounds.
Hollingworth says: “All brokers will receive a payment from a lender for introducing business to them, essentially a commission payment.
“Some brokers, including L&C, don’t make any additional charge to the customer and work only off the lender payment.”
Others charge you a flat fee for their advice, such as £500, or a percentage fee, for example 1% of the mortgage loan.
Image credit: Future PLC/ Colin Poole
How do I find a good mortgage broker? What should I look out for?
Word of mouth recommendations are a great start, so speak to friends and family first.
Your estate agent might work closely with a broker and recommend them, but you’re not obliged to use their preferred partner.
Leyland adds: “Check out their reviews, Google them, view their social media business pages, ask your friends for recommendations. Contact a few brokers and see how quickly they get back to you.”
Some brokers have specialisms, such as helping the self-employed or those with credit blips, which could be invaluable if you have specific needs.
You might want to use a broker that allows you do most of the process online, or prefer a face to face meeting, so choose a broker that works in the way you prefer.
Do I need a mortgage broker?
You don’t need a mortgage broker, but they’re a great idea unless you’re confident about choosing the right product from the thousands on offer.
With a mortgage broker, you get a mortgage market expert on your side, helping you find the best deal, filling in the forms, chasing the lender and solicitor on your behalf, and holding your hand through the whole homebuying process.
This can be particularly useful for first-time buyers, self employed mortgage applicants and those with credit issues.
The post What is a mortgage broker and do you need one? appeared first on Ideal Home.
