This guide was last updated 30 October 2016
There still seems to be a general misconception of what a mortgage broker actually does. The days of a broker simply looking down a list of products, pointing at the cheapest and pocketing the inflated commissions are thankfully long gone. As mortgage criteria toughen, professional mortgage advisers who provide down-to-earth advice and a proper relationship-based service are, and always will be, in demand.
A professional mortgage broker provides a level of service that a borrower cannot obtain directly from a lender and certainly not from a comparison site. Brokers can tell you in seconds what the cheapest rate in the market is and, at various times, this will vary between a direct-to-lender product or a broker only deal, but this misses the point. Can the cheapest product actually be attained and is it the right fit for your personal circumstances?
Simply choosing the cheapest product does not take into account the myriad of personal requirements and future flexibilities a client may need. Every day there are tales of woe from all areas of the consumer market about people who bought the cheapest products, which turned out to have a sting in the tail and cost a lot more in the long run.
For those who want to take out the biggest loan they are ever likely to have without obtaining any kind of advice then the internet is a wealth of information. At Coreco we regularly publish new mortgage guides and blogs giving advice but we can’t account for everyone’s personal situation. This is where a mortgage broker’s expert knowledge and advice come into play.
The decision to hire a mortgage broker can be tricky – how can you know if the investment will be worthwhile? Usually, people only think about the value of a broker in monetary terms and, while it’s likely that a mortgage broker will save a borrower money in the long run, the short-term fees can be off-putting. But mortgage brokers offer more than just saving cash. Here are some examples of areas that are made easier with a mortgage broker.
Perhaps the most useful thing a broker can do – it’s the key service they provide, after all – is offering a wide range of mortgage products. Lenders often have a range of broker-specific deals and, in addition to that, brokers often have access to more lenders than those on the high street, offering borrowers a wide spectrum of deals to suit their requirements. Coreco, for example, have access to over 11,000 products from over 90 different lenders – that’s a big choice!
A mortgage broker has the industry knowledge and experience to give a detailed and accurate analysis of the industry. That doesn’t just mean the perspective of the industry in its current form, but reliable predictions on the state of the market in the future. A good broker can also give you their professional opinion of what other economic changes are liable to impact your mortgage repayments in the future.
You can never really be sure you can trust the information coming from a company trying to sell you their product. That’s why getting a second opinion – especially on large investments like a mortgage – is crucial. Brokers go one step further and offer you impartial, reliable advice before they’ve even spoken to a lender.
A lender can only talk about their own products and many will not provide perhaps the most important bit: advice. A mortgage is the largest commitment that most people will ever make and to do this without taking full advice and comparing all the options available is a risky game, especially with all the small print and fees that surround mortgage products.
You can trust a broker to put your best interests first, but if they don’t or let you down in any way, you could be compensated. It’s in the broker’s best interests to offer you fair, honest advice. A small fee paid to a broker can still save thousands of pounds over the term of a mortgage or avoid costly penalties in the future.
Shopping around for what you want always has the same problem, no matter what it’s for. You will look at all the best deals in one area and then move on. Except when you’re looking at the next area, there’s no telling what new offers have come out where you were just looking! Thankfully, for mortgages at least, a broker can help out, because part of their job is to identify the best deals as soon as they become available. This could offer new avenues for buyers looking for a mortgage.
We’ve talked a lot about paperwork on our blogs before, such as this list of the paperwork you’ll need to get a mortgage. It’s one of the more frustrating aspects of mortgages because a small mistake can mean the difference between approval or rejection. Looking through it and being certain everything is present is a pressured and thorough process, but a mortgage broker can take that pressure off your hands.
What you’re really buying when you hire a mortgage broker is convenience. Applying for a mortgage usually means a huge amount of legwork and research that can overshadow everything else in your life. Brokers are happy to take the reins on your mortgage application, do all the research, and then explain the best options for your situation. Removing that burden will make for a more pleasant buying process with minimal stress.
As we’ve discussed already, brokers are great for making sure that your application isn’t rejected, both by ensuring you are applying for the right deal and double-checking your application documents. One great advantage of this is that, because brokers know which lenders are most likely to offer a deal, there is less chance of your credit rating taking a hit due to repeated rejections from lenders.
Brokers don’t just offer mortgage deals – many of them offer a range of services relating to property ownership. One example is insurance. Coreco has many contacts offering great deals on both life and home insurance. Since property insurance is usually necessary to get a mortgage, you will need to look into it. But with buying a house as your top priority, insurance can fall down the to-do list. Your broker might be able to help out with the burden of hunting down insurance deals.
Your mortgage requirements could be more specific than a traditional mortgage. There are many options of lender for a first-time buyer or a buy-to-let, but an overseas mortgage or a large development mortgage requires specialist lending with loans from those who are familiar with specialist mortgages. For high net worth individuals, the whole range of highly competitive products (sometimes market leading) available through Private Banks – of whom offer a blank sheet of paper approach to underwriting – remains the preserve of the more respected broker.
These are very difficult to find without broker assistance and, in some cases, it’s even necessary to contact the lender via a broker. A good broker will have a host of specialist lenders and private banks who are experts in these kinds of mortgages. You can find out more about the range of mortgages we can help with on our Specialist Mortgages page.
For those who are generally time poor, or need to move quickly, the service a broker provides can take the pain and hassle out of the process and ensure that deadlines are met without you breaking a sweat. Securing the property of your dreams often means moving quickly and many larger brokers have access to the underwriters themselves to discuss any complexities with a particular case from the very beginning, rather than having to go through the layers of process that walking into a branch often entails. This means that any potential issues can often be anticipated and the whole process smoothed.
Helping a busy client to complete the mortgage application, preparing all the documentation and liaising with the lender, valuer, estate agent and solicitor to ensure deadlines are hit is a time consuming process and this is all part of the brokers service.
Knowing which lenders are able to proceed quickly and which ones have a paperwork backlog can be the difference to actually getting the property you want or losing out.
Lastly, if your application is rejected for any reason and you have been applying independently, you will need to restart your application process with another lender. Brokers, on the other hand, can take your application and reapply it directly to a new lender, saving you time and effort and, potentially, making sure you don’t miss the window of opportunity to secure your property!
There is also the aftercare service; not only looking at how clients can ensure they are able to both repay the loan and protect their new home, but advising them each time their product comes up for renewal or their circumstances change mid-term. By using a broker from the beginning they will be able to advise you how best to move forward when you circumstances change or your product comes up for renewal.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495