Not sure if you want or need a mortgage broker? We’ve taken a head-to-toe look at everything they entail to help you make up your mind.
The world of mortgages can be mind-boggling, to say the least. From the types, terms, interest rates and deposits, there’s a whole load to get your head around, and we’re not naive to the fact that can be easier said than done.
However, that’s where a mortgage broker can come in handy.
What is a mortgage broker?
A mortgage broker is an individual or company that arranges mortgages between you and a lender. They work with you to determine what kind of mortgage deal is best for your personal circumstances, and then they’ll find the best deal based on your criteria.
Mortgage brokers have a duty of care to you, the borrower, and so they’re obliged to put forward the best solutions for your unique circumstances. For some, this provides a greater level of peace of mind, and removes the worry that individual lenders have only their best interests at heart.
It’s worth noting there are different types of mortgage brokers; those that are tied to one lender, those who recommend mortgages from a panel of lenders, and those that are completely independent (i.e. not tied to any lenders).
What does a mortgage broker do?
Mortgage brokers exist to guide you through the mortgage process. They help you understand the stages and will talk you through topics like:
Once you’ve agreed on a mortgage deal you’re happy with, they’ll then also submit all your information and be the go-to between you and the lender, to help ensure everything runs smoothly.
Why use a mortgage broker?
There are a number of benefits to making use of a mortgage broker, and these include:
1. You’re protected
As we touched on at the start, mortgage brokers have a duty of care. This not only means they have to put forward a suitable mortgage and be able to justify their recommendation, but it also means you have grounds to complain if their advice isn’t up to scratch. And, if your complaint is successful, you could be compensated.
2. Qualified advice
There’s not much (if anything) you can’t learn online nowadays. But, mortgages are a massive financial commitment, and not everyone feels comfortable self-teaching their way through the process.
Leaning on a mortgage broker can give you peace of mind you’re entering a commitment that’s right for you not only now, but in the long-term too.
3. Open up your options
If you opt for an independent mortgage broker you’ll open yourself up to significantly more options than you would if you went in-branch, for example. The broker will be 100% unbiased and won’t be restricted to one or a handful or lenders, both of which could boost your odds of bagging the very best deal.
4. Insider knowledge
It’s a mortgage broker’s job to know the industry inside out. They understand the market, the criteria, the application process and how individual lenders operate. Better yet, because of their relationships with certain lenders, they might even be able to influence and chase things in a way you can’t yourself.
As with most things in life, it’s not all a bed of roses and there can be drawbacks to leaning on mortgage brokers, mainly:
Cost: not all mortgage brokers are free, and purchasing a property can be expensive enough as it is without adding another cost into the equation! There’s no set fee for mortgage brokers and the cost will vary from broker-to-broker, so make sure you shop around for a competitive price if you’re prepared to pay - just make sure your choice is reliable.
Limitation: if you don’t go for an independent mortgage broker, you’ll instantly be limiting the number of options available to you, which means you could miss out on some of the better deals. Regardless of which type of mortgage broker you team up with, always ask two questions at the outset: 1) how many lenders do you work with? and 2) do you hold any preference towards certain lenders?
Quality: as with any type of product or service out there, quality will vary from broker-to-broker. Best case, a below-par mortgage broker can slow the process down, but worst case, they can cost you £1000s if they don’t secure the best deal for you.
To rid yourself of both these worries, make sure you thoroughly vet your mortgage broker before you take out their services, and never go with your first find - compare a few different options first.
How much does a mortgage broker cost?
Unfortunately, there’s no straight answer for this. Some mortgage brokers will charge a fixed fee, some will come with an hourly rate, some will take a commission and others will take a percentage of your mortgage. If you’re lucky, they might be completely free.
However, to give you an idea, according to the Money Advice Service, the average cost of a mortgage broker comes in at around £500. It’s not cheap, but depending on how much they save you in the long run, the cost could save you big bucks and end up being a drop in the ocean in the grand scheme of things.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.