While it is not essential when looking to arrange a mortgage, seeking the advice of an independent mortgage broker makes sense and can ultimately save you time and money.
When it comes to arranging a mortgage the options available can be very confusing, so having the services of an independent mortgage broker to help you clarify these options and select the right mortgage for your needs is invaluable. An independent mortgage broker will search the whole mortgage market for the best mortgage deal. They will search through all the mortgage deals available, looking at interest rates, loan amounts and fees, matching this with your personal circumstances and advise you on which mortgage deal is best for you. Once you have chosen a mortgage deal, an independent mortgage broker will help complete the application and liaise with the chosen lender and deal with any problems that may arise. Using a mortgage broker usually gives you the best chance of getting the best possible mortgage offer.
No two mortgage applications are the same and applicants can often have complicated factors such as being self-employed, receiving income from various sources or perhaps issues with their credit history. An independent mortgage broker will look at each application and decide the best lender for this applicant's unique circumstances. While it is possible to get a mortgage direct from your chosen lender it is a case of putting "all your eggs in one basket" as your chosen lender may not be the best for your individual circumstances. This could result in you being offered a lower mortgage amount or even being rejected by the mortgage lender, which will cost you time and money.
When should I seek mortgage advice?
It makes sense to seek mortgage advice as soon are you are thinking of buying a property, moving house or remortgaging. The earlier you start seeking advice the more time you give your chosen independent mortgage broker to search the market and get the best mortgage for your circumstances.
There is no need to find a property you want to buy before you seek mortgage advice as most lenders will provide what is known as an 'offer in principle'. This means that you will be ready to go ahead once you have found a property. If you are just starting out, we would recommend reading our article '8 things you should know before applying for a mortgage'.
How much does mortgage advice cost?
The actual cost of mortgage advice varies between mortgage brokers. Most lenders will pay a mortgage broker what is known as a 'procuration fee' for placing the mortgage with them. Some mortgage advisers will also charge an additional fee for their services but many brokers do not charge their customers any additional fees.
As we have explained above, there is no need to pay for mortgage advice, however, there are a number of fees related to obtaining a mortgage which are detailed in the table below.
What are the fees when applying for a mortgage?
|Fee||What is it for?||How much?|
|Booking Fee||This fee is part of the mortgage deal and charged on submission of the mortgage application||Most mortgage deals will charge this fee and are typically around £200|
|Arrangement Fee||This fee is charged by a lender to process the mortgage application may be added to the loan but this will increase your mortgage amount & interest payments||Differs from lender to lender but typically up to £500|
|Valuation Fee||This is the fee for valuing the property you are purchasing to satisfy the lender that it is worth what you are paying for it||A basic survey will cost around £250 depending on the value of the property|
|Mortgage Account Fee||This fee is charged by the lender for setting up & maintaining your mortgage account||Typically around £200|
|Telegraphic Transfer Fee||This is a charge for transferring the mortgage money from your lender to your solicitor||Up to £50|
Once you have received your mortgage offer and are proceeding with the house purchase there will be further costs involved in the purchase of a property, as follows:
- Stamp duty - first-time buyers will pay nothing on the first £425,000 on property purchases, for anyone buying their next home, the first £250,000 of a property purchase is free of duty and then the amount you will pay is tiered from 5% to 12% depending on the property price. If you are purchasing an additional home for more than £40,000 then an extra fee of 3% will be charged on top of the basic duty. Here is a handy Stamp Duty Calculator to obtain the exact cost for the property you are purchasing
- Conveyancing fees - for the legal work involved in purchasing or selling a property, typically £1,000 to £2,000
- Local authority searches - such as a drainage search, an environmental search and a planning search typically between £250 and £500
- Help-to-Buy supplement - If you’re buying with a Help-to-Buy scheme, you’re likely to be charged extra because of the additional legal work that this entails. Help-to-Buy supplement costs are, typically, around £250
Should I pay for mortgage advice?
Some mortgage brokers do charge a separate fee for mortgage advice but you can get expert mortgage advice from an independent mortgage broker without paying this extra fee.
How to choose a mortgage broker
There are 3 different types of mortgage brokers:
- Tied - where the broker is tied to using only one lender for sourcing your mortgage and normally will be employed by the lender concerned.
- Muti-tied - where the broker can arrange mortgages from a limited number of lenders.
- Independent - where the broker can choose from the whole market when sourcing your mortgage.
To get the widest range of mortgage options it is advisable to engage the services of an independent mortgage adviser who will be able to search for your mortgage across the whole mortgage market and obtain the best mortgage for your circumstances. Before selecting a mortgage broker please check if they are fully authorised to carry out mortgage business by searching the Financial Services Register.
How to find a mortgage adviser
There are plenty of independent mortgage brokers to choose from and the choice can be rather confusing so we have researched the mortgage market and made available to our readers one of the most innovative independent mortgage advisers in the UK, Habito*. We would recommend that you read our article - "Habito Review: The best online mortgage broker for you?" to fully understand why we like them so much and, in fact, why members of Money to the Masses have used them in order to obtain their own mortgage.
If a link has an * beside it this means that it is an affiliated link. If you go via the link Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. But as you can clearly see this has in no way influenced this independent and balanced review of the product. The following link can be used if you do not wish to help Money to the Masses - Habito