If you’re feeling overwhelmed it can be helpful to talk to a mortgage broker.
What is a mortgage broker?
A mortgage broker or mortgage adviser will search the market for you to help you find the best mortgage deal. While banks and building societies will only offer you a mortgage from their own range, an independent mortgage adviser will search the whole market on your behalf and source the right deal based on your circumstances and budget.
What are the advantages of using a mortgage broker?
With so many mortgage deals to choose from, it can be difficult to understand which one is right for you. It can therefore be a good idea to talk to a mortgage broker as soon as you start your search.
A good broker will be able to offer mortgage advice and sift through the deals, taking interest rates and fees into account, to help find one that matches your needs best. They’ll be able to look at your financial situation and advise you on which mortgage deals are most affordable for you.
What’s more, because mortgage brokers know how each lender operates, they’ll also be able to advise you on which deals you’re more likely to be accepted for, so you can apply more confidently.
Once you’ve found a mortgage deal, a mortgage broker can also help you with the application process and will be able to explain exactly what paperwork you’ll need to hand to get started. This can help make the process go more smoothly and help ensure you’ve filled in your application correctly.
Your broker will also liaise with the lender on your behalf and deal with any problems that could cause unnecessary delays.
Is there anything I need to watch out for?
Yes. If you use a mortgage broker, it’s important to know whether or not they are ‘whole of market’ or tied to a particular lender or group of lenders (usually called a panel).
If your mortgage broker isn’t able to recommend deals from the whole market, they won’t be able to tell you about some deals, even if one might the cheapest.
Some mortgage products simply aren’t available to brokers. These are called ‘direct only’ deals, and are offered by banks and building societies directly to their customers. A mortgage broker, even one who can access ‘whole of market’ deals, won’t be able to tell you about these.
It’s also important to know how your mortgage broker will be paid. Some take commission from lenders, while others will charge you a fee for their services. Mortgage advisors who offer you the choice have the right to call themselves ‘independent’.
All mortgage brokers are required to provide you with a document called a ‘Key Facts Illustration’ (KFI) about their services, how much their work will cost and how they will be paid. Always check it and ensure you’re happy with the contents before signing on the dotted line.
How to choose a mortgage broker
When looking for a mortgage broker, you’ll come across three types:
- Tied mortgage brokers: offering mortgages from a single lender
- Multi-tied brokers: offering mortgages from a certain group or panel of lenders
- Whole of market brokers: offering mortgages from the entire market – although be aware this won’t include ‘direct only’ deals as these are only available to customers who apply with the lender directly
If a mortgage broker says it is ‘independent’, it should offer you whole of market deals.
Whole of market is generally the better option to go for as this will give you access to the greatest range of products.
What should I ask a mortgage broker?
As well as finding out whether a mortgage broker is whole of market or tied to certain lenders, you should check whether your mortgage broker is regulated by the Financial Conduct Authority (FCA).
This will help to ensure you receive a certain standard of advice and that if anything goes wrong, you will be able to complain to the Financial Ombudsman.
It’s also a good idea to ask how often you will be in contact and whether this will be mostly by phone or face to face. You could also ask what other financial products they can help you with (such as life insurance).
Finally, make sure you ask how the broker will be paid.
How much does a mortgage broker cost?
Some brokers will charge you a fee for their services – this will be either on an hourly or flat fee basis - while others will be free but will receive commission from the lender.
It’s best to ask upfront how much you’ll be charged if you have to pay, and if you choose to get free mortgage advice, you should be told that the broker will receive commission.
All mortgage brokers will need to give you a document called a Key Facts Illustration (KFI) about their services.