Mortgages can be an intimidating subject.
A lot of money is on the line.
And making decisions during the period of selling and buying property is stressful.
So, with dozens of lenders in the UK, how do you know the best one to use?
This is where a mortgage broker’s services are helpful.
What is a mortgage broker?
A mortgage broker (or mortgage adviser) is an expert who helps people get mortgage deals.
They act as an intermediary between borrowers and the lenders.
Brokers usually have contacts at all the major banks, which means they can give advice and insight.
In some circumstances, they may also be able to access better rates.
Some estate agents have an in-house mortgage broker. This could be included as part of their service.
What tasks does a mortgage broker do?
Search for mortgage products
There are lots of different mortgage products out there. Each lender chooses to present them in various ways.
And for unique circumstances, you may need a specific product that isn’t widely known or available.
A broker can do all these searches and give you the results.
Speak to lenders on your behalf
You don’t need to communicate directly with your lender, if you don’t want to. Your broker can do this on your behalf.
This is useful if they’ve already had an excellent relationship with those working there.
Things may move faster, and negotiations could go well.
Give you advice
The mortgage broker will give you advice and guide you through the mortgage application process. You aren’t obliged to follow this, if you don’t want to.
But it’s beneficial to have a sounding board who can, especially if it’s your first time buying a house. Or if the subject of mortgages confuses you.
They can answer all your questions and communicate with the banks on your behalf.
Complete applications
Filling out paperwork is not the most exciting activity. Luckily, your broker can take this off your hands and do all the ‘grunt work’.
Mortgage broker costs
Most mortgage brokers charge in one of three ways.
- A flat rate. This is often around £500. This should be made clear to you at the start of your interaction
- No charge. Instead, they’ll get paid a commission by the lender. This is their reward for giving them a new customer
- A percentage of your mortgage amount. So, the larger your mortgage, the more you’ll pay. Around 0.5% or 1% is typical.
Is a mortgage broker compulsory?
No, a mortgage broker is not compulsory.
You can speak directly to a lender. In this case, all the tasks listed further above must be done by you, including:
- Searching for products
- Speaking to the lenders
- Completing paperwork
- Negotiating.
Can an estate agent force me to use their mortgage broker?
No, an estate agent cannot do this. They will often advise you to use their broker. This will be done under the claim that they offer a better service.
But if you say no, then the estate agent must respect this. Forcing you to use their broker is against the law in the UK.
Does a mortgage broker really get better deals?
Sometimes, but not always.
Most of the time, a mortgage broker only accesses publicly available deals.
This means that if you use a comparison website, you may be able to find the same deals, too. It saves you the hassle, or expertise of looking in the right place.
Although, some lenders work exclusively through brokers and do not deal directly with the public.
This means that you can’t find their mortgage products on comparison websites. In this case, your broker could offer a better deal.
How to find the best mortgage broker possible
If you decide to use a mortgage broker, you shouldn’t always go with the first one you speak to.
You should not always trust the one partnered with the estate agency. Do some checks first to ensure you make the right choice.
Ask friends and family for recommendations
Ask people you trust whether they’ve used mortgage brokers recently.
If they have, get their feedback on the experience, and whether they’d recommend the professional they used.
Check for online reviews
You should see whether a mortgage broker has online reviews. Read through these and see what past customers have said.
If you can’t find reviews, and the broker refuses to give them to you, it’s a bad sign.
Make sure they aren’t tied to just one bank
You ideally want a mortgage broker who is ‘whole of market’. This means that they aren’t tied to just one lender.
They can thus assess all the different options available and give you the best advice possible.
Get clarity on how they charge you
You should speak to your broker before jumping into an arrangement.
Do they charge a fixed rate, or a percentage of your mortgage?
Alternatively, if they get paid by the lender, then this could mean that they’re free for you. You don’t want to be deceived in this area.
Advantages of using a mortgage broker
Save time and stress
Mortgage brokers can save you time and stress during what is often already a stressful time.
You can spend less time doing research or second-guessing decisions and more time focusing on your move!
Get the best deal possible
Your broker can ensure that you don’t miss out on anything.
They’ll hopefully utilise all their contacts and find the best possible option.
You might miss out on this when doing it yourself – as you’re not an expert.
Receive advice from an expert
Your mortgage broker can give continuous advice along the journey. This can make you feel reassured.
They’ll become someone you can ask any question to, no matter how silly.
Disadvantages of using a mortgage broker
Extra cost
Moving house costs money (around £9,000 on average). When you search for mortgage options by yourself, it saves money.
Using a broker involves an extra fee unless they take a commission from the lender instead.
There is no guarantee of a smoother process
Like with all professions, there’s variation in the quality of service.
There may be hiccups – or your broker might not be very good! In either scenario, you can’t guarantee it’ll be worth the money.
Potential for bias
You must research all the mortgage brokers available.
Otherwise, you might end up with someone tied to one lender. This can make bias extremely possible, and you may not get the best deal.
