How to find a good mortgage broker
One of the most difficult things about getting a mortgage is finding a mortgage broker that you can trust and rely on. Applying for a mortgage can be extremely stressful and time consuming, especially if your mortgage broker isn’t doing their job.
The difference between a good and a bad mortgage broker can cost you money and mean more hassle that you don’t need. Finding a good broker can make the whole process easier and far less stressful.
It is generally good practice to get proper advice from a qualified mortgage expert to make sure that you get the right deal.
Most money advice services will recommend that you should deal with a mortgage broker to help you. This is mainly because of how complicated and time consuming it can be to get a new mortgage or a remortgage.
What is a mortgage broker?
The term mortgage broker refers to a person or a company that sources mortgages from a panel of lenders for its customers. Mortgage advisors will be regulated by the Financial Conduct Authority (FCA) and will have the required qualifications to be able to provide mortgage advice.
There are also several different types of mortgage brokers, including:
- Local broker
- Telephone brokers
- Online brokers
- Estate agency brokers
How does a mortgage broker help?
There are a number of ways that an independent mortgage advisor would be able to help you and would offer support, especially to people with limited mortgage knowledge. They can talk you through how much you could borrow, your best choice of lender and more.
The job of a broker is to help you to find the best mortgage deal based on your circumstances and guide you through the application process. When you speak to a mortgage advisor, they will use their knowledge and expertise to support you.
Here are some of the main reasons why a mortgage broker can help:
- Save you time: good brokers will help you to get your mortgage more quickly by chasing estate agents, solicitors, and lenders. This can help you to save weeks and even months on your mortgage application.
- Gather evidence and information: most brokers will tell you what information you will need up front and then collect this information from you. Some mortgage brokers will have a secure portal so that you can download this information yourself.
- Help you to find the best deal: brokers can also get deals through some lenders that aren’t available any other way. Exclusive deals can be lower rates, less fees or have extra incentives.
- Solve any problems: there are many reasons why you might need to sort out issues along the way when you apply for a mortgage. A good broker will be all over this and be able to respond quickly and provide solutions.
Is a mortgage broker better for me?
Generally a broker is the best route for most people looking to buy a home or investment property, but there are certain situations where they are more useful for borrowers.
Some of the main reasons why you might be better off working with a mortgage broker:
- First time buyers
- Buy-to-Let mortgages
- Self employed or complex income
- Bad credit or low credit scores
- Credit issues like IVAs, CCJs, and defaults
- Non-standard construction properties
- Auction purchases
- Debt consolidation mortgages
- Home improvement mortgages
- Homes with Multiple Occupancy (HMO)
- Equity release or lifetime mortgages
These and other types of borrowing can be complicated to navigate so they might be best for a mortgage broker to deal with. They can help you with things that a bank or building society might not be able to do.
What are mortgage broker fees?
Most brokers will charge a fee for their services which is the same as most financial services advice businesses. A broker fee means that the broker can spend the time and effort needed to properly process your application.
Mortgage applications can be extremely complicated and especially for those with non-standard or complex needs. It is understandable that a broker would charge a fee for this work based on the time and effort required.
Fees for brokers can range from £300 up to £2,000+ depending on the broker and the amount of work required.
There are several different stages where a mortgage broker fee might be payable:
- On application
- At mortgage offer stage
- On completion
Different mortgage brokers have different payment terms and fee scales, so it’s worth checking before you commit. If you’re not sure about your mortgage brokers fees then you should ask them for further information.
How do mortgage brokers earn money?
There are several ways that mortgage brokers earn their money but not all of them affect you. As we’ve mentioned above, a broker fee is only a part of the total income that a mortgage broker will be paid from
The other ways that a mortgage broker will generate income will include:
- Lender procuration fees: these are commissions that are paid by the lender to the broker directly once your mortgage has completed. These are usually around 0.3% of the overall loan that you have taken but they don’t affect you, your mortgage loan or your interest rate in any way.
- Legal referral fees: solicitors will usually pay the broker a referral fee to mortgage brokers for referring customers over to them for conveyancing services.
- Buildings and Contents insurance: home insurance companies will also pay an element of commission for the mortgage broker setting up a policy with them.
- Life insurance commission: mortgage brokers will often recommend and provide advice about life insurance, critical illness cover and income protection. These policies will pay a commission for arranging them but this does not affect your premiums in any way.
Do mortgage brokers get better deals?
It’s difficult to say whether all mortgage brokers have better deals than larger financial institutions, big banks or building societies for example.
There are some lender exclusive offers that are only available through certain mortgage brokers, depending on their panel and how much business they write. Generally you will find that some mortgage brokers will have specific loan options available from time to time.
Is a mortgage broker worth the money?
Generally, a good mortgage broker will be worth their weight in gold and especially for complicated mortgages.
The alternative is either applying to your existing lender or via your own bank or building society. This can be simpler in some straight forward circumstances, but it can also be extremely difficult and complicated.
There are lots of reasons why working with a broker would be better for you to help you get the right deal and more quickly. The risks of encountering problems that can be catastrophic for your mortgage, can be quite high.
How to find a good mortgage broker
There are several things to look out for when you’re searching for a mortgage broker and some questions you can ask.
Some of the things to look out for:
- Customer reviews and feedback is possibly the most important element when looking for the right mortgage broker
- Personal recommendations from family members or friends can also be a great way to find a good mortgage broker
- Google searches will also show you which mortgage brokers have the right information on their websites to help you
- Impartial review services like MoneyPeopleOnline.co.uk can help to show you which mortgage brokers are verified to provide you with advice
Some of the questions that you can ask your mortgage broker:
- What are your qualifications? Some of the most popular qualifications that are required by the FCA to provide mortgage advice are CeMAP (Certificate in Mortgage Advice and Practice) or CeFA (Certificate in Financial Advice).
- How many lenders do you deal with? Most good mortgage brokers will be classed as Whole of Market or Independent, which means that they have a panel of mortgage lenders. The majority of mortgage brokers will have between 50 and 100 mortgage lenders on their panel.
- Do you charge a fee? It is very common for a mortgage broker to charge a fee for their services, but this shouldn’t put you off dealing with them. You should make sure that any fees are reasonable and clearly displayed.
Advantages of using a mortgage broker
There are lots of positives about using a mortgage broker and especially a good one who is very helpful. As we’ve said many times in this guide, there’s a big difference between a good and a bad mortgage broker.
Mortgage broker Pros
- Access to more lenders and potentially better deals
- Higher chance of successful mortgage application
- Less hassle and stress
- Save time gathering information and evidence
- Help to find the best mortgage deals and home loans
- Able to look at alternatives if your mortgage is declined
- Useful for complex mortgage applications
- No fees to pay if mortgages aren’t approved
Disadvantages of using a mortgage broker
There are also some potential disadvantages for using a mortgage broker that you should carefully consider.
Mortgage broker Cons
- Broker fees and charges
- Not always got access to the right deal for you
- Bad mortgage brokers can be frustrating
- Can cause additional problems if you can’t get hold of them (always busy)
- Mortgage switches can be far easier
Choosing a mortgage broker
We’ve teamed up with Essential Mortgages who are an experienced team of mortgage specialists based in Manchester. You can speak to them by calling 0330 118 8188 or head to their website to get help with your mortgage.