Why use a mortgage broker? A look at the UK market
Complex rules and tightening of lending conditions
Since the Mortgage Market Review in 2014 complex legislative changes in how banks and lenders can offer mortgages and to whom have meant a sharp rise in the number of people using mortgage brokers, with 60% + of mortgages now being brokered.
Many customers have found that it can now take them hours to fill in all the questions and criteria as required and sometimes wait weeks for an appointment at a local bank to even have a preliminary discussion. This is due to new rules’ whereby any staff advising on mortgages have to be qualified, meaning that a lot of people are turning to the most qualified of all people to advise – Brokers. Additionally large high street banks who didn’t offer their products through brokers are now entering into business with brokers for a mutual win-win for customers.
More personal, tailored assistance and a duty of care
A broker is working directly for you, not a bank, or one lender; they are committed to finding you the very best deal for your circumstances. It also means that they do all the hard work applying and advising professionally so you are less likely to be rejected. Additionally if you need a non-standard mortgage, i.e. self-employed, or are in need of advice on the range of other non-standard mortgages & products out there then a broker will be able to assist in this area as all lenders have differing criteria which brokers should be aware of and navigate to the most appropriate deal for you. Brokers must recommend a suitable mortgage and be able to justify why the mortgage they have chosen is right for you. If their advice is not up to scratch, you can complain and be compensated.
An ongoing relationship
A broker is a financial advisor who specialises in Mortgages. Mortgage brokering is a business and most brokers either charge a fee for their services or get commission from the lender. This will all be clearly disclosed at the outset. Some brokers offer a lifetime fee, meaning that they will be on hand as your broker for all new mortgage requirements as and when. 2 year deals come around very quickly so this can be a cost saving element in the longer term. Brokers can and will also advise on financial products relating to mortgages to assist you with better financial planning such as life insurance, critical illness cover and more to ensure you are financially secure and protected for the future.
Types of brokers
Independent brokers: Also known as ‘whole of market brokers’, these brokers look at the entire mortgage market to find the best product for you. However, “whole of market” does not cover every single deal, as the name suggests.
Tied brokers: These are usually recommended to you by a particular mortgage lender and only offer deals from that one mortgage provider.
Multi-tied brokers: These offer a limited range of mortgages from a panel of mortgage lenders.
Since the changes in 2014 for the most complete and wide-ranging products and advice, an independent broker with a whole of market service offers the best service for people seeking a broker.
What to look for in a broker
Key criteria to find a good broker is the number of loads they are able to offer, the number of providers they work with, the amount you will be charged for this services and what kind of reputation they have.
Visit their website to start off, checking how many years’ experience they have. It’s then always good to ask around friends and family as a personalised recommendation is a great place to start. Otherwise an online search for reviews (Google, social media and so on) to find out how they approach their business and how they are regarded gives a good idea of their services. Also it’s worth considering if you want to deal exclusively on the phone or would you prefer a face-to-face appointment.
Final things to note / take away
• A broker is working for you so has a duty of care to provide you with the correct mortgage offering unbiased, qualified advice
• An independent broker is not tied to any lender and can at times offer exclusive deals
• The value of advice – brokers can save you a lot of time, probably hassle and hopefully money
A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.