Whether you’re a first-time buyer, moving home or looking to remortgage, sifting through the thousands of available mortgage deals can seem daunting. If you’re feeling overwhelmed, it might help to talk to a mortgage broker.
What does a mortgage broker do?
A mortgage broker (or mortgage advisor) will search the market for you. They’re there help you to choose the best possible mortgage deal. While banks will only offer you a mortgage loan from their own range, an independent mortgage advisor will look at all available options from hundreds of lenders, ensuring you get the best rate according to your circumstances.
Are there advantages to using a mortgage broker?
Yes; with thousands of mortgage deals on the market, it can be hard to work out which one is right for you. Therefore, it’s a good idea to speak to a mortgage broker at the beginning of your search.
A good broker will be able to look at your financial situation and sort through the deals available to you. They’ll be able to find the ones which best match your needs and also be able to tell you which of the deals you’re most likely to be accepted for – this can be advantageous, as a rejection can mean that you have to wait a period of time before you can apply again, which can significantly hold things up.
Once you’ve found the mortgage loan that’s right for you, a mortgage broker can also help you with the application process. They’ll make sure you fill out the forms right the first time and let you know what paperwork you’ll need to complete your application.
Some advisors will offer additional services for a fee, even negotiating the purchase price for you in some cases.
A good mortgage broker should also be able to offer advice on other products, such as home and life insurance.
Choosing a mortgage broker
There are three main types of mortgage broker:
Tied: Brokers offering mortgages from a single lender
Multi-tied: Brokers offering mortgages from a particular group of lenders
Whole-of-market: Brokers offering mortgages from the entire market
If a broker says they are “independent”, they should be offering you a whole-of-market service.
It is usually better to go with a whole-of-market or independent mortgage advisor as they have access to the widest range of products, missing out on only the direct-only deals offered by some lenders.
What should I ask my mortgage broker?
As well as finding out whether they are whole-of-market or tied to certain lenders, you should also check your chosen mortgage broker is regulated by the Financial Conduct Authority (FCA). This will ensure you receive a certain standard of advice. It will also mean you’re able to complain to the Financial Ombudsman should anything go wrong.
Finally, make sure you ask how your broker will be paid.
How much does a mortgage broker cost?
All mortgage brokers will need to give you a document called a Key Facts Illustration (KFI) about their services. This document will detail how your broker will get paid, usually one of two ways:
Fees: Some brokers charge a fee for their services. They can charge a flat fee or an hourly rate, which will be agreed beforehand.
Commission: Others provide their services free of charge and receive a commission from the lender.
It’s best to ask up front how much you’ll be charged or whether the broker will receive a commission, so you can plan your finances accordingly.
Still unsure? Get in touch or drop into our offices in Preston, Garstang or Southport for more information on what an independent mortgage broker could do for you!
