Whether you’re buying your first home or looking to remortgage, a mortgage broker (or mortgage adviser) can help you to find the right mortgage to match your personal and financial circumstances. They can even handle the mortgage application on your behalf, making the whole process a lot easier.
Here are the three main factors to consider when choosing one:
While many people could be put off the idea of using a broker due to the fees some of them charge, the reality could be a lot different if they find you a good deal from the many mortgage products they have access to. You may end up saving thousands of pounds in the long term. However, it’s worth noting that some banks will have certain deals that are only available directly to borrowers and not through brokers.
If your mortgage broker (or bank) tries to sell you life insurance or mortgage protection insurance alongside your mortgage, it’s best to do your own research first as you’re likely to find a better insurance deal elsewhere. Many brokers are tied to a small panel of insurers, so won’t necessarily have the best deals.”
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 say, a 25-year mortgage, this benefit could be worth the broker 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.
The most important difference is the number of mortgage providers that a broker will compare.
Some brokers are tied to specific lenders. Some will compare deals from a limited list of lenders, while others will claim to be “whole of market”.
Yet, it gets more complicated than that, because some “whole of market” brokers won’t compare lenders that only accept direct applications.
If you don’t use a mortgage broker who actually compares the “whole market”, you’ll need to do additional research to ensure you’re truly getting the best deal.
If you’re looking to save some cash, a no-fee mortgage broker could be the right option for you.
These are mortgage brokers that won’t charge you a fee for some or all of the mortgage application process. Some will offer fee-free services for sourcing your mortgage and then charge for arranging it, while others will charge no fee for the entire process.
As such, no-fee mortgage brokers can be an attractive solution if you don’t want to have to pay a large sum of money to secure a mortgage deal.
It is important to know that no fee mortgage brokers make their money by earning commission directly from lenders, which is why their services are not at any additional cost to you. This could mean that you do not get the best possible deal by going through a broker.
The answer to this question depends very much on the mortgage broker you choose to use. For instance, some mortgage brokers offer a no-fee service for recommending a specific loan. But if you decide to go ahead with their recommendation, then there can be fees of around £500-£2,000 to pay once you submit the mortgage application. The fee you pay could come alongside another commission fee that the broker would receive from the lender on completion.
Other brokers, like Habito or London & Country, offer free mortgage advice from start to finish over the phone or through live chat. This means you won’t pay any fees, from when their brokers compare and source the best deals for you, to when they help you submit your online application.
While going fee-free will save you money and might sound like the way to go, it’s important to remember that many of these brokers will only be accessible to you over the phone.
Some people may wish to have access to their broker face-to-face, in which case, paying the arrangement fees and opting for a traditional mortgage broker might be a better option for you.
A fee-free mortgage broker may also try to point you towards deals that will earn them a higher commission, which means you may end up paying more in the long term than if you had opted for a deal with a bigger fee in the first place.
A mortgage broker will do the heavy lifting of finding the right mortgage for you based on your personal circumstances, income and more. And they’ll use their years of experience to make the mortgage application on your behalf, which could give it a boost in the eyes of your mortgage provider.
Having a real human to touch base with can be invaluable, especially when faced with unexpected or complex issues. My broker became like a home-buying counsellor, and continues to check in with mortgage rate updates; so a huge support during and after the home-buying process.
All this lovely support doesn’t come for free. Mortgage brokers will charge a fee in a variety of ways: a fixed fee, a percentage of the loan or commission from the mortgage lender.
Choose an option that works for you and your budget. Your broker should be totally transparent about any fees in advance. Not all mortgage brokers cover the whole market, which means they may only have access to limited mortgage options. Full market is typically the way to go, unless you have very specific mortgage requirements.
Individual mortgage brokers or advisers must complete a Certificate in Mortgage Advice and Practice (CeMAP), which is a qualification approved by the Financial Conduct Authority (FCA). So, look out for these when researching potential brokers.
Ask how reachable your broker/adviser will be. Hopefully you won’t need to make an appointment 2 weeks in advance for a 20-minute phone call!
Online mortgage brokers are ideal for people who don’t want to DIY but typically throw their phone across the room when they see a call come through.
An online mortgage broker like say, Habito or London & Country, will compare mortgages and apply on your behalf – all via a digital service like a website or app. You’ll get matched with a personal mortgage expert, but comms will typically all be via live chat or some kind of online portal or app. Online brokers aim to make the process fast and efficient, and often come with a sophisticated dashboard to help you easily track and manage your mortgage application – as well as potential additional tools and calculators.
Similar to human mortgage brokers, online brokers will likely charge a fee, even if it’s commission from the mortgage provider. However, any fees you personally might incur are typically cheaper than those charged by a traditional mortgage broker.
Being a digital-only service, online mortgage brokers may offer less personalisation than human brokers and it may be harder to access support for a particularly complex or nuanced issue. Again, unless you have very specific requirements, ensure your online broker covers the whole market, as some may only have access to limited mortgage products.
The do-it-yourself model could be a good option for your type-A personalities, planners and spreadsheet lovers – or, if you CBA to fork out a broker fee. Taking such a hands-on approach to finding the right mortgage gives you tons of oversight over the market and the rates, products and terms that are available. And, essentially, you automatically have full-market access (aside from a few deals only available through brokers). Plus, with no middleman, you’ll have direct contact with your mortgage provider.
While we don’t doubt your skills as a researcher, particularly if you’re a first-time buyer you’re essentially learning on the job… which could mean you miss an important detail or mortgage product you didn’t know existed. So it’s up to you to be super thorough. Even then, there may be deals which only brokers can access.
Mortgage brokers can save you a lot of time and research, especially if your financial circumstances are unusual. They have an in-depth knowledge of the mortgage market, know which lenders might be more likely to accept your application and often have access to a really wide range of mortgage products.
But there are sometimes fees for using their services, plus some are not “whole of market” or don’t include “direct only” mortgages offered by lenders to borrowers without an intermediary involved. So make sure you research your mortgage broker before you proceed with them.
Official data shows that 63% of people in England and Wales own their home. We look at the latest home ownership statistics in the UK.
We looked into the latest buy-to-let statistics to see how many of these mortgages have been taken out and how many Brits are living in rental properties in the UK.
We look at the latest first-time buyer statistics to see how difficult it is to get your foot on the property ladder in the UK.
From the average mortgage payment and debt to how many outstanding mortgages there are, we explore the latest mortgage statistics in the UK.
Find out how the cost of living in the UK has changed over time in comparison to inflation with our historical price tracker.
Our review reveals everything you need to know about Habito.
How do property prices in the UK compare to the rest of the world? We estimated the cost of a city centre 2-bed flat in 100 countries to find out.
Find out about the range of mortgages from Nationwide, plus what customers say about the lender.
Looking for a mortgage with The Co-operative Bank? Find out how to get the right mortgage for you.