Arranging a mortgage or remortgage will probably be one of the biggest financial transactions you will make and therefore it is important that you get the right advice. Whilst many people will deal directly with a lender it may be beneficial to use the services of a mortgage adviser. So how do you go about finding a mortgage adviser? What should you check and what level of service should you expect?
How to find a good mortgage adviser
The best way of finding a good mortgage adviser is via a personal recommendation. But in the absence of a recommendation, there are a number of organisations such as unbiased.co.uk, that can provide details of mortgage advisers in your area.
What to check when choosing a mortgage adviser
Check their Authorisation
All mortgage advisers have to be authorised to arrange mortgages and any insurance needs for their clients.
Authorisation can be either -
- Directly authorised with the FSA whereby all compliance and controls are monitored by the FSA
- An appointed representative of a firm that is directly authorised with the FSA.
It is mandatory for any mortgage adviser to inform potential clients of their authorised status prior to conducting business.
Check whether they are independent or tied
Independent Financial Adviser - will be able to source any insurance products required from any provider and are obliged to give 'best advice'. However, when it comes to the mortgage they may be able to use any lender or a select panel only.
Tied Adviser - will only be able to offer any insurance products required from one provider. They may be able to arrange a mortgage from any lender, a select panel or even just one lender as in the case of a bank or building society employee.
Check how they get paid
When it comes to paying for advice there are three methods commonly used.
Paying a fee - the adviser charges you a flat fee for arranging the mortgage and any related insurance products. You need to be aware that the adviser is also likely to receive a fee from the lender for placing the business with them and commission for any insurance arranged.
Paying by commission - As stated above, fees and commission will be paid to a mortgage adviser, by the lender, for arranging your mortgage and insurance required. If you use this payment method then as far as you are concerned there is no upfront fee payable by you to the mortgage adviser. But whilst the commission/fee paid by the lender may not be visible to you it will, none the less, be included in the costing of any products arranged and will be paid by you indirectly.
Part fee, part commission - some advisers will rebate some or part of their commission in exchange for a fee.
It is important that you are clear on any fees to be charged by a mortgage adviser and ensure that these are included in your budgeting.
Note: There will also be, in addition, arrangement and booking fees, charged by the lender, connected to the mortgage which should be explained to you by your adviser.
What service can you expect from a good mortgage adviser?
It is important at this interview that your mortgage adviser carries out the following.
- Explain fully the service they can offer together with any fees payable for this service
- Conduct a full fact-find on your current financial situation and your aspirations regarding your house purchase
- Clearly explain the various types of mortgage and calculate the costs involved with each type including fees payable
- Clearly explain the type and cost of any insurance products discussed
- Explain the application process and the timescales involved
- Provide you with illustrations confirming the costs of mortgages and any insurance together with regulatory documentation explaining their authorisation status
Once you have found the property of your dreams then you will need to attend a final interview where the mortgage adviser should carry out the following.
- Confirm the arrangements that are to be made
- Ensure that you complete all the necessary paperwork correctly
- Collect any fees due
- Provide you with details of the process and likely timescales
Hopefully, the above will ensure that you get a mortgage that suits your needs within your budget. However, if you are not comfortable with your mortgage adviser then move on to another one, there are plenty about.