What is a mortgage broker and what do they do?

A mortgage broker is a market expert and will ensure you choose the best mortgage for your needs.

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They’re not just for people with poor knowledge of how mortgages work. They’re also highly recommended when you’re in a tricky personal or financial situation and unsure which lenders are likely to offer you a deal.

Mortgage brokers have a deep understanding of the various criteria that individual lenders require to approve an application, so they can point you towards the best deals that you’re likely to be approved for.

You’ll save a lot of time and stress working with a mortgage broker. More importantly, it should prevent you from destroying your credit score by making going through multiple failed mortgage applications.

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How to choose the best mortgage broker

You can search for mortgage brokers using websites like vouchedfor.co.uk or unbiased.co.uk. Here are the three main factors to compare when choosing one:

  • How many lenders do they compare? A lot of mortgage brokers only work with specific lenders. Some brokers who claim to be “whole of market” won’t check lenders that offer “direct only” mortgage deals, although others will. Either way, it’s important to be clear about how many lenders your broker will compare on your behalf. If it’s not truly “whole of market”, you’ll need to ensure you check the remaining lenders in order to guarantee yourself the best deal.
  • Fee. Some brokers don’t charge a fee, because they receive commission from lenders instead. Others will charge their customers a one-off fee. Make sure you’re aware of how much and when you’ll be charged.
  • Customer service. Check for testimonials on brokers’ websites.

Questions to ask a mortgage broker

  • What type of mortgage is best for me? A mortgage broker will be able to explain the pros and cons of the various mortgage types, including tracker mortgages, discount mortgages or variable-rate mortgages. They’ll also be able to talk you through the various government schemes designed to make home ownership more affordable and check if you’re eligible for them.
  • How much can I afford to borrow? Mortgage brokers have a detailed knowledge of individual lender’s affordability criteria and will be able to give you an accurate picture of how much they’ll be willing to lend to you.
  • What mortgages can I access with bad credit? Your credit score will play a huge role in a lender’s decision to approve your mortgage application. Mortgage brokers have an advanced knowledge of lenders’ credit score criteria and will point you towards a lender that specialises in bad credit mortgages if necessary.
  • Do you cover the whole of the market? The nature of current regulation means your broker doesn’t have to tell you about every deal on the market. It’s up to you to be sure about how many lenders they’re comparing.
  • When do you charge a fee? The fee structure can differ between mortgage brokers, so it’s important to understand when you’ll be charged. With some brokers, your fee will be charged after you submit the mortgage application. Others will only bill you once your application has been accepted, while it’s also possible you may be charged at both of these milestones.

Advantages of using a mortgage broker

  • Peace of mind. This a huge financial decision you’re making, so there’s a lot to be said for being sure you’re doing the right thing. Buying a house is stressful enough without wondering whether you’ve made a five-figure mistake. You’ll be able to question your mortgage broker about any part of the house-buying process you don’t understand.
  • It saves time. Comparing every mortgage on the market is a time-consuming process and applying for one isn’t a walk in the park either. Lenders will ask you for all types of paperwork and it can sometimes take weeks for them to process your application. A mortgage adviser can find the best deal for you and assist you with your application, helping to streamline the process and boost your chances of being approved.
  • Knowledge of unique mortgage situations. Do you have bad credit or low income? Are you buying an unusually structured property? Have you recently changed jobs, separated from a spouse or suffered a bankruptcy? All of these situations will affect your mortgage application. A mortgage adviser will know which lenders are best placed to approve applicants in these scenarios.
  • Protect your credit score. When you apply for a mortgage, you’ll be credit checked and this will result in your credit score decreasing slightly. That’s no big deal if your application is approved, but it becomes a problem when you rack up multiple failed applications. In this situation, your credit score could take a serious dip, potentially harming your chances of being approved for any decent mortgage deals in the short-term future. By using a mortgage adviser, you boost your chances of being approved first time around.
  • Some mortgages are only available through brokers. These experts therefore provide the easiest way to compare the whole market.
  • Some mortgage brokers can negotiate a better deal. Although this is far from a guarantee, many mortgage brokers have reported being able to negotiate a better rate for their customers. This service alone could be worth the fee you pay them.

Advantages of going direct

  • It saves you the fee. If you’re confident in your ability to find the best mortgage lender, you can save yourself the expense of a mortgage broker’s fee by doing it yourself.
  • Work during hours that suit you. When using a mortgage broker, you’ll have to contact them during traditional working hours, whereas you can search and apply for a mortgage online at any time of day.
  • You don’t have to rely on anyone. While there are plenty of experienced brokers who would be dubbed ultra-reliable by their customers, not all of them can boast glowing reviews. If you prefer not trusting someone else with your finances, you might like to approach a mortgage provider directly.

How to find the best mortgage lender

It’s worth taking your time to locate the best mortgage broker in the region.

For tips on finding the best individual for the job and making the most of their service, take a look at our list of key questions to ask them.

Can a mortgage broker negotiate a better deal for me?

Some mortgage brokers will approach a lender and submit an application on your behalf and many claim to be able to negotiate a better deal for you.

When you consider how much even the smallest percentage drop could save you over the length of a 25-year mortgage, this benefit could be worth the fee alone.

What’s more, some mortgages are only available through brokers, so you’ll get access to a bigger range of deals by using one.

What are the pros and cons of using a mortgage broker?

Pros

  • It’s fast and stress-free
  • You’ll be recommended a deal you’re likely to be approved for
  • You’re far more likely to find the best deal
  • Your broker might be able to negotiate a discount

Cons

  • Some mortgage brokers charge a fee
  • Some mortgage brokers don’t cover the whole market
  • You’ll have to work within your broker’s opening hours

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