If you’re looking for a mortgage, you might be wondering whether or not you should talk to a mortgage broker or go directly to the lender.
These days, brokers do more than simply churn out a list of available mortgages for a hefty fee, so it could be worth your while to see what they can offer.
If you are planning to employ the services of a broker, do your homework first: ask friends and family for a recommendation, check the internet for reviews, and suss out their fee structure.
Ask them outright how many lenders they work with – the more lenders, the more options you have at your disposal and the more likely you could be to get a good deal.
Generally, there are three types of broker
Tied brokers: These are usually recommended to you by a particular mortgage lender and offer deals only from that one mortgage provider.
Multi-tied brokers: These offer a range of mortgages from a panel of mortgage lenders.
Independent brokers: Also known as whole-of-market brokers, these scan the entire mortgage market to find the best product for you. However, ‘whole of market’ can be a little misleading. Some lenders, such as First Direct, do not work with brokers and offer mortgages to borrowers only directly.
Mortgage brokers have to tell you from the outset exactly what range of mortgages they can offer. For the most wide-ranging advice and products, it is always advisable to choose an independent broker that offers a whole-of-market service (although bear in mind the caveat mentioned above).
Legislative changes have resulted in a tightening of the rules with regards to mortgage affordability checks, the qualifications of mortgage brokers and the information they must provide to borrowers about their services and fees.
Since the changes, both lenders and brokers must consider your financial situation and assess your affordability when suggesting suitable mortgages for you. They must also be able to prove they have done this.
Whilst this legislative revolution has made it harder to obtain a mortgage, it’s also made it far safer to use a broker. You can now trust they will undertake a full comprehensive financial assessment and therefore point you towards a range of mortgages you will almost certainly be eligible for.
With the huge expense of buying your first home or moving house, it may be tempting to consider what looks like the cheaper option of applying for a mortgage with your own bank, or by going direct to another lender for your mortgage.
However, avoiding paying broker fees (although there are plenty of reputable fee-free brokers out there) now could cost you thousands of pounds over the next few years if you end up with a worse mortgage deal than a broker could secure for you.
Even if you are pretty clued up about the mortgage market, you might be missing a trick by not using a broker, as some of them have access to a larger range of mortgages and exclusive deals with lenders.
They can also help speed up the application process by getting you fully prepared and steering you towards mortgages you will most likely be accepted for.
If you have done your research and are confident that you have found the best deal, or you simply want the convenience of asking your current bank for a mortgage, that’s fine.
But be aware of both the pros and the cons of going down that route.
The advice you get from lenders will refer only to their own products rather than being an unbiased view of the market as a whole.
You will not gain access to any broker-only deals, even if they’re offered by your chosen lender.
When deciding on whether or not to use a mortgage broker, a balanced approach may be the best solution.
Do your own research online first, ask your current bank and other direct-only lenders what deals they have available and then speak to a reputable mortgage broker to see what else is available and suitable for your personal circumstances.
That way you’ll get the holistic advice and information you need in order to get the very best mortgage for you.