June 8, 2021

Mortgage broker vs bank:
debunking the myths

Choose a mortgage adviser and you’ll pay more, you won’t be able to choose a product from your existing lender and you won’t have the same protections you get when you choose a bank. You may have heard some or all of those. There’s just one problem, though: none of them are true. 

Choosing a mortgage is tough enough without ‘fake news’ getting in the way. So in this post, we gather together some of our (least) favourite mortgage broker misinformation and give it a quick fact check…

Myth 1: Independent mortgage brokers are more expensive (because of our fees)

Not true. Apply for your mortgage through your bank and your application could come attached to an arrangement fee, a booking fee, a valuation fee, a fee for setting up the account and (potentially) a higher lending charge if you only have a relatively small deposit.

Virtually every mortgage has some fees somewhere, but when you choose a mortgage with a bank, you’ll be tied to whatever fees come with that product. Choose an independent mortgage broker and we can search the whole market for products that either don’t come with so many fees attached, or that keep those fees low.

Ah, you’ll hear the banks say, but we don’t charge a broker’s fee. That’s true, but often, neither do we. Depending on the mortgage, you could find our fee is largely (or entirely) covered by the commission we receive on a mortgage product. And just to be clear, that doesn’t mean you pay more for your mortgage. In fact…

Myth 2: A bank will always offer the cheapest rates on its own mortgages

You’d think so, wouldn’t you? Frequently, though, it’s not true. So if, for example, your latest mortgage deal is about to expire and your bank offers you a ‘great deal’ to continue your relationship with them, speak to your independent mortgage adviser first. Chances are they’ll be able to find a better deal with the same bank for less.

Myth 3: Independent mortgage brokers are more expensive (because of the rate you end up paying)

Not true. In fact, the exact opposite is true.

Suppose you’re a bank. You have 50 mortgage products on offer, which creates a reasonably broad spectrum of cheapest to most expensive. But now, put yourself in the shoes of an independent mortgage broker, with a HUGE range of mortgage products to choose from. What are the chances that your bank’s cheapest mortgage (out of a choice of 50), is actually the best deal available out of the thousands available? Pretty slim.

In March 2021, even though the market has been subdued by the pandemic, there were still around 3,500 mortgage products available according to moneyfacts. And as money.co.uk noted, even a difference of 1.5% on a £100,000 mortgage over a 20-year term could be worth £1,030 a year.

So you stand a much better chance of finding a better deal with an independent mortgage advisor who has access to a much wider range of products.

Myth 4: You won’t be able to choose a product from your existing lender

Um, yes you will. And as we’ve already discussed, it could be a better deal than they’re offering you.

Myth 5: It’ll be cheaper if I do it myself

No it won’t. Not every mortgage is available to everybody. Some lenders keep some products to themselves. But many of the best rates are exclusively available to brokers. So while doing it yourself may mean you’re able to secure the best deal from the products you’re able to see, you won’t be able to see all of what’s available.

Myth 6: You don’t get the same financial protection going through an independent mortgage broker

Yes you do. In the UK, if you offer mortgage advice you have to be qualified to do it. That means holding a Financial Conduct Authority (FCA)-recognised qualification. It also means that you are regulated by the FCA. That gives you two pieces of reassurance:

i) You can expect a certain level of expertise; and
ii) You can use FCA approved complaints and compensation procedures if there’s
ever a problem

Banks have to be FCA regulated and their advisers qualified. So do we. There is no difference in the level of protection you can expect using an FCA regulated independent mortgage broker – but do check they are regulated. We are.

Let’s lay those myths to rest for good. Have a chat with us about your mortgage, and let’s find the best deal on the market for you.

Talk to us now.



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