What Is A Mortgage Broker?
If you’re looking to buy a new home – or are considering mortgaging your current property – you’ll know hunting for a mortgage can be confusing. It’s a really big financial decision, but it’s shrouded by confusing jargon and financial complexities. That’s why many of us choose to turn to a mortgage broker for some expert advice, but what exactly are they, and why should you use one?
What is a mortgage broker?
A mortgage broker – which is also known as a mortgage adviser – is a person or company who finds and arranges a mortgage on your behalf for an established fee. They’ll work with you to establish what kind of mortgage you’re looking for, and will find one based on your criteria, acting as a middleman between yourselves and the lender.
Are there different kinds of mortgage broker?
Not all mortgage advisers are the same, and it’s important to know that before signing a contract and agreeing to let them guide you into this important financial decision. There are three main kinds of mortgage brokers:
- A broker that serves a specific lender, and can only advise on their products
- A broker with access to mortgages from a small group of lenders
- A broker that has access to the majority of lenders, and compares a large number of mortgages
When looking for a mortgage adviser, this may not always be immediately obvious – it’s down to you to engage with the broker and talk about exactly what kind of service they provide. Usually, it’s more advantageous to work with the third kind of adviser – one that doesn’t work for one particular lender, but objectively works with a large number of them.
Why use a mortgage broker?
It’s definitely possible to find and arrange your own mortgage – so why would you pay someone else to do this for you? Using a mortgage broker has a number of advantages that attract customers:
- Expertise – Having a mortgage broker means instant access to a well of knowledge about mortgages, without having to do much prior research yourself. If you’re not someone who’s particularly good at finances, having an expert on hand for advice is advantageous when applying for a mortgage.
- Confidence – Obtaining a mortgage is one of the most significant financial decisions to be made, so it’s important you’re feeling confident about your choice. Mortgage advisers truly understand mortgages, will have fully assessed your criteria and eligibility, and are aware of how to complete an application properly.
- Convenience – Using a mortgage broker can save a lot of valuable time when picking out a mortgage. Especially if you’re in the process of buying a new home, using a mortgage broker simply means you have one less thing to worry about or remember.
- Variety – Your mortgage broker is likely to have long-standing relationships with a plethora of lenders, some of which you may struggle to find on your own. However, they also may not be able to access deals from big lenders on the market that you could on your own, so it’s important to bear this in mind.
- Assessment – Mortgage brokers will typically help you assess your own financial situation and can give advice based on your spending habits or credit report. It’s a personalised service which won’t only help you find a mortgage, but can also provide valuable insight into your finances.
What do mortgage brokers charge?
How much a broker charges entirely depends on how they charge, as explained below. The average British house buyer usually spends around £500 on their broker, but you could see yourself paying much more or less than this, depending on who you go with.
- Fixed fee – Some mortgage brokers choose to charge a flat rate for their services, which they should outline to you well before writing up a contract – and when it is written up, the price should be the same as what you’re expecting.
- Hourly rate – Some advisers charge their clients based on the time it takes to find your mortgage. This can be difficult to estimate and can leave you vulnerable to hidden charges, so ensure to talk through this thoroughly if this is how your broker charges.
- Commission-based – More commonly known to consumers as “fee-free”, commission-based brokers may not charge you directly, but will only work with lenders which pay them commission. Make sure you’re clear on who exactly your broker is working with, so you can ensure you’re actually getting a good deal, not just what’s profitable for the adviser.
- Percentage based – Some mortgage brokers may charge you based on a percentage of your mortgage. This can be particularly expensive for more valuable properties, but can lead to a good deal on more affordable ones.
How do you find a mortgage broker?
There are so many mortgage brokers to choose from – a simple Google search will have you inundated with suggestions of advisers in your area. When picking the right broker to go with, you should firstly ask around for recommendations, and take a good look through their reviews on independent sites like Reviews.io and Trustpilot.
Once you’ve got a broker in mind, it’s important to get in touch with them to find out more information before you make a decision. Make sure to ask:
- If they’re independent
- How they charge their fees, and how much they would cost
- If they’re on the Financial Services Register
- If they’re CeMAP qualified – or to an equivalent
- If there is a required mortgage amount (some brokers only deal with mortgages over a certain threshold)
What to ask a mortgage adviser?
If you’re paying a mortgage broker, you need to make sure you’re getting everything for your money – and that they’re fully engaged with you, your requirements, and your general finances. If you’re wondering what to ask of your mortgage adviser, here’s a few examples to get you started:
Which kind of mortgage is best for me?
A mortgage broker will take a look at your finances, and the house you’re going for, to work out which route is best. However, choosing a mortgage is no easy feat – there’s lots of different types on the market.
How much deposit should I have?
Different lenders all require different amounts of deposits, and how much a lender asks from you can also change depending on your credit or financial situation. Find out how much you should save early from your mortgage adviser.
Can you guarantee an on-time closure?
Closing your contract on time is down to your lender, and if they can’t match the date on your purchase contract, it can bring on a whole host of other charges – especially if your lock-in expires during the process. Ask if your mortgage broker can guarantee they’ll avoid this.
Which are the top mortgage brokers in the UK?
There are hundreds of mortgage brokers all across the UK, and as aforementioned, its best to seek out recommendations and research the experience of previous customers before you lock into a contract. However, if you’re on the hunt, here are some of the most highly rated brokers in the UK:
- Access Financial Services Ltd – Chester
- Positive Solutions (Financial Services Ltd) – London
- Millennium Wealth Management Ltd – Shrewsbury
- Mortgage Marketplace Ltd – Chandlersford
- New Start Mortgages – Cheadle
- Whittlesea Mortgages – Bridgwater
- Advantage Home Finance – Glasgow
- Whateley Wealth Management Ltd – Birmingham
- Novus Financial Solutions – Erith
- Community Mortgage Services Ltd – Manchester