Buying a home or remortgaging the terms of your old mortgage deal is a complex and cumbersome process for most. Sourcing the best mortgage deal and then successfully navigating the mortgage application process so that you can complete your house purchase or remortgage requires both skill and patience. This is where a mortgage broker can provide some expertise and guidance.
In this article, we describe what a mortgage broker does, why you should consider using one and finally, how to find a mortgage broker you can trust. If you would like to get to it, you can jump ahead to "How to find a mortgage broker".
What is a mortgage broker?
A mortgage broker specialises in finding the best mortgage deal based on your financial situation. Mortgage brokers have in-depth knowledge, contacts and expertise when it comes to the mortgage market. They sometimes work independently but many work as part of a mortgage brokerage company or even a mortgage network.
What does a mortgage broker do?
Mortgage brokers act as your adviser and assist you in sourcing and successfully applying for the best mortgage deal. This often involves searching the market for the best mortgage rates and sometimes negotiating bespoke mortgage offers based on your needs. They will usually liaise with solicitors, conveyancers and other parties on your behalf too.
Should I use a mortgage broker?
It is extremely useful to have a mortgage broker on your side to navigate the mortgage market whether you're buying a new home or simply remortgaging. Regardless of how knowledgeable you may feel, there is usually no harm in checking that you haven't missed a trick in finding the best rate and mortgage terms before you commit - especially if the mortgage broker does not charge fees. We provide a few ways to find a fee-free mortgage adviser that you can trust later in the article.
Do mortgage brokers charge a fee?
Not all mortgage brokers charge a fee - those that do are required to tell you about their charges upfront and you'll find the detail in the "terms of business" document that they are required to share with you. Mortgage fees can cost in the region of £500 to £1,000. Mortgage brokers that do not charge for their services still get paid but instead of charging you a fee, they take an introduction fee or what is sometimes called a procuration fee from the lender.
How do mortgage brokers get paid?
Mortgage brokers are often paid a procuration fee by the lender and this does not usually affect what you pay for your mortgage. If your mortgage broker also charges customer fees then you will be required to pay this to them according to their 'terms of business'.
It is also worth noting that, should your mortgage broker also arrange your life insurance, critical illness cover and income protection, they will usually receive a commission payment from the insurance provider as well. It may also be worth reading our article "Should you buy life insurance through a mortgage broker?"
Who pays the mortgage broker?
Normally the lender will pay your mortgage broker the introductory fee directly and you will only have to pay a fee to your mortgage broker if this is part of their terms of business. Mortgage brokers may also be paid a commission from the insurance company that provides your life insurance and other personal insurance products if they recommended these to you.
You should receive a full summary of the costs within the terms of business that are issued at your first meeting with your mortgage broker. Online mortgage brokers will offer their terms to you electronically.
Can a mortgage broker help you to get a bigger mortgage?
It is possible for a mortgage broker to get you more money than you can source yourself. The mortgage market is complex and lenders have varying rules and qualifying criteria; understanding these can mean that a mortgage broker is more likely to find you more money on the mortgage offer due to their unique market insights.
Can different mortgage brokers get better rates?
Yes, mortgage brokers vary in quality and some may have limited access to deals meaning you could get better rates with one mortgage broker over another. Some mortgage brokers have special deals with certain lenders and some even provide lending, so you should search for the best mortgage broker for your circumstances. Not all mortgage brokers can access every lender and we explain this further on in the article.
Are mortgage brokers worth it?
Using a mortgage broker is worth it in the vast majority of cases. However, it depends on the quality of the mortgage broker that you use as well as your personal financial situation.
If your financial circumstances are favourable and your needs are straightforward, you may be able to get a mortgage without using a mortgage broker. However, even the most straightforward mortgage applications can be derailed by problems that arise during the credit checks, valuation and conveyancing.
On the other hand, a poor mortgage broker may add little value to the process so you must choose carefully and ensure that your mortgage broker has the right credentials to meet your needs and expectations. We show you how later on in this article.
Benefits of using a mortgage broker
There are a number of benefits of using a mortgage broker and we list some here:
Save money
Perhaps the most popular reason for using a mortgage broker is that they will search more mortgage interest rates than you can access as a customer. A number of mortgage lenders make some or all of their mortgage offers available only through mortgage intermediaries and accessing these could save you a lot of money even if the interest rates are only marginally cheaper.
Save time
The task of searching for the best mortgage interest rates can take up a lot of time. Indeed, investing hours researching different interest rates may still leave you feeling that you've missed something. Additionally, tasks such as chasing your solicitor and lender for updates can often be left to your mortgage broker.
Peace of mind
Even if you have been through the process before, things do change and it can be reassuring to know that you are being led by an expert.
Expert guidance
Making decisions can be difficult especially when you're making, what is likely to be, one of the largest purchases of your lifetime. Having a professional on your side guiding your decisions and actions can be invaluable.
Speed
It is unusual for a house purchase to complete without a few hiccups and delays along the way and many of these can be smoothed over with the help of a mortgage adviser. Your adviser will usually ensure that your documentation is acceptable before you apply for a mortgage and that can go a long way to speeding up the process.
How to find a mortgage broker
Finding a mortgage broker is relatively simple but choosing a good mortgage broker that you can trust can require some effort. As with most specialist services, it can be good to go with a recommendation from someone you know and trust or use a service that vets and reviews mortgage brokers in your area.
Qualifications
Mortgage advisers must be regulated by the Financial Conduct Authority (FCA) to provide mortgage advice and will normally hold a certificate in mortgage advice and practice as validation of their qualification to provide advice.
Search range
It is also worth determining whether the mortgage broker is 'tied', 'multi-tied' or 'whole of market'. A tied mortgage adviser will usually work with one lender and this tends to be the case with those who work for a bank or building society. Multi-tied mortgage brokers access a panel of lenders and the number of lenders they check could be very small so it is worth checking this upfront. The whole of market mortgage brokers will carry out the most comprehensive searches because, as the name suggests, they search all mortgage deals across all lenders.
Vetted services
Services such as VouchedFor* and Unbiased* allow you to search for a mortgage broker near you with the confidence that the services have been vetted by users. VouchedFor services are particularly attractive, providing a choice of 5-star rated mortgage advisers and saving mortgage customers, on average, £80 per month for every £100,000 of borrowing.
Choose an online mortgage broker
The ease and access of online services are desirable to us all and when it comes to mortgage hunting, there are online mortgage brokers who do this well. Habito* provides its customers with quick and simple online access to search dozens of mortgage deals from across 90+ mortgage lenders in the UK. It was one of the first online mortgage brokers to come to market and has gone on to provide bespoke mortgage lending too.
Habito allows you to search a number of different types of mortgage deals for a house purchase whether you're moving home or are a first-time buyer. It also includes the facility to search for remortgage offers as well as buy-to-let mortgage deals. In less than 15 minutes you could find the mortgage deal suited to your financial needs. You can read our full review of Habito for more information about the services it provides.
Is my mortgage adviser any good?
If you have found a mortgage broker and wish to check if they are good then take a look at our "7 best questions to ask a mortgage broker" article which will guide you through what you should expect from your mortgage adviser and how to understand the differences that could impact the service and mortgage deals you receive.
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. The following links can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Habito, VouchedFor, Unbiased
