Do I really need a mortgage broker?
Finding the cheapest and most suitable mortgage can be difficult. The headline rate of interest is not always the best option on the market and every person is unique with their own set of circumstances. Searching through thousands of mortgage products, navigating the various criteria restrictions and making sure that an application progresses on time can be done without the help of a mortgage broker. However, can you be sure you have really found the best deal possible and be confident that your application will succeed? We discuss whether you need a mortgage broker and what the alternatives are.
Today we will cover:
What do mortgage brokers do?
You can think of a mortgage broker in a similar way to a financial adviser. They listen to your situation and goals to match you with the most suitable mortgage available out of the thousands on the market. Brokers work solely on your behalf and act as the link between yourself and many financial institutions. This means that they can use their expert knowledge to ensure your circumstances fit within the mortgage lenders criteria. Because of this they can provide professional advice for the cheapest deal possible and help you find and finance your dream home.
As providing mortgage advice is an activity regulated by the FCA (Financial Conduct Authority) a mortgage broker is duty bound to source the best option for you. They can provide you with a budget to work towards, full costs of the new house and ensure that all of your paperwork is adequate to achieve your formal mortgage offer. If you have complex requirements a broker could save you a lot of time and effort.
Brokers are also trusted by the mortgage lenders to provide them with applications that have the best possible chance of success. This cuts down on wasted time and helps ensure that they can work within their service levels. Some mortgage lenders will only offer mortgage products through a mortgage broker.
What to look out for in a good broker.
If you need a mortgage broker, there are a few things you should look out for to ensure you receive the best service possible.
Check for the following:
- Whole of market.
Check that your chosen broker can source and recommend mortgage deals from the whole market. There are some firms who can only access a limited panel of options and you may therefore not receive the comprehensive level of advice required.
- Fees.
Some brokers will charge a fee for the professional service they provide. Others will be free of charge. A fee is perfectly acceptable as the amount of time and work involved can be substantial. If you feel the fee is reasonable and not excessive that is fine. Fee free brokers usually need to make up for lost fees by processing larger volumes of applications so you may not receive such a personal service.
- Tied status.
Some brokers are tied to certain lenders and are only able to discuss a very limited range of options. Again, look for whole of market and check they are not tied in any way.
- Regulated status.
Check to make sure that your broker is FCA regulated. In order to provide advice, they should be authorised and regulated by the Financial Conduct Authority.
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Ok, I need a mortgage broker. What can they do for me?
Mortgage brokers can provide a number of services that will benefit you greatly. These include:
- Saving you money by finding the best deal out of thousands of options.
- Source a mortgage if you have complex requirements including self-employment, credit related issues, or want to use a low-cost housing scheme.
- Save you time by searching every lender for you in one go.
- Reduce the chance of being declined by sourcing only those lenders who are willing to help.
- Certify and verify your paperwork such as payslips, ID, evidence of address etc.
- Advise on the best level of deposit to provide and how the mortgage should be structured.
- Help explain all types of jargon you will come across.
- Provide advice on suitable protection products.
- Issue a decision in principle and help you when it comes to offering on a property.
Initially, when looking for a broker consider one with local knowledge of the area in which you are looking to buy. Some mortgage lenders won’t be able to lend on certain types of property. This is because they may be made of , or they may be close or near to commercial property.
Simply give them a call or send them an email to arrange an initial appointment and chat through their unique selling points.
What if I want to arrange everything myself?
Firstly, if you would prefer to arrange the mortgage yourself directly with the lender then that it fine. In fact, there are still some deals that are available only if you go directly to the mortgage lender themselves. However, remember that there will also be deals that only brokers can arrange for you. A broker will be available to discuss both options with you if you wish.
However, if you are approaching the mortgage lender directly, they may not provide you with an advice-based service. Instead, they are trusting that you have carried out the relevant checks to be sure that the mortgage is right for you and they will not let you know if there are cheaper alternatives.
Alternatively, a mortgage can be arranged in the branch of the bank of building society and many of these will have their own in house adviser to talk to. However, be aware that they are only able to discuss their own deals and services and not those from the rest of the market. You may also find a long waiting list for an appointment.
Conclusion – Do I really need a mortgage broker?
Ultimately the decision lies with you, but I would always recommend speaking to a broker as the benefits are numerous. They could potentially save you a lot of money. Not only on the mortgage deal itself but by helping you achieve a lower asking price or by minimising your third-party costs. A good broker will give you a better chance of getting a formal mortgage application agreed and in a faster time than by looking to go it alone. If you can find one with a reasonable fee and a personal, professional service, they will make the entire process of arranging a mortgage considerably easier.
If you situation is more complex, a broker would be the first port of call as they will know the best path to take.
Only if the standout best deal is a direct only solution would I forego the help of a broker. You will need to be confident that you tick all the boxes the lender will be looking at. Additionally, you should have also compared their offering to the best alternatives elsewhere. Also, be prepared to spend time on the phone chasing and updating the lender during the application process as they will always ask for further information. The benefit is that you may be able to avoid paying a fee for the mortgage advice. The downside is that if it goes wrong, you will most likely need to approach a broker anyway to fix the problem quickly.
A well ran pirate ship always needs a good crew, and a smooth mortgage application always needs a mortgage broker.
Post compiled by Grant Carpenter CeMAP, CeFA – 15 years of regulated mortgage advice.
Please note that the content listed within this post is purely for information purposes only and does not constitute advice.
