Wondering if you should be using a mortgage broker as opposed to?
There’s no right or wrong answer to this question. It all depends on your circumstances and the level of service you need.
First time buyers in particular can benefit from using a mortgage broker. Buying a property can seem like a daunting process and getting the finance part right is crucial. It can make or break the whole sale process.
It’s not just the newbies who can benefit. If you’ve lived in the same property for a number of years, financing and lenders are likely to have changed quite a bit. Unless you have a head for figures or follow the financial news closely, a bit of advice could be beneficial.
In this part of the site, we take a look at the pros and cons of using a mortgage broker.
The Benefits of Using a Mortgage Broker
In essence, a broker is a middleman. In theory, he/she should have no axe to grind and will offer impartial and highly specialist information and advice.
They are qualified to advise you and regulated by the Financial Services Authority. Whilst lenders only offer information, the majority of brokers offer full advice so you get a better picture of specific products.
Using a mortgage broker who is independent will give you access to hundreds of products from different lenders across the whole market. Including offers that aren’t available on the high street.
They cut through the swathe of different mortgage products out there to find those best suited to your specific financial situation.
They handle negotiation with the lender on your behalf. Plus paperwork. This cuts down your stress levels instantly!
Brokers are renowned for being able to get better deals than individuals acting on their own behalf. After all, they do negotiate for a living!
You are likely to get a high level of service. Using a mortgage broker can be a good move if you need a high degree of help, advice and assurance. Brokers want happy customers. A satisfied client will tell their nearest and dearest about a positive experience. Personal recommendations mean more business.
Brokers can often help those in unusual circumstances. For example if you’ve been bankrupt or have court county judgements on your credit file. A broker will advise you on available mortgages and how taking one out will affect your situation.
The Pitfalls of Using a Mortgage Broker
As I said before, a broker acts as a middleman. Some people don’t like using them as they believe it saves time. In some cases, it does. However, in others a broker can save you the hassle of trawling through different products.
There’s no such thing as a free lunch! Whether tied or independent, you will pay for the privilege of using a mortgage broker.
If you’re not paying an upfront fee (usually around £300), the broker will receive a commission when you take up the mortgage.
You need to choose carefully. A personal recommendation is always a good place to start. Always check that the broker you intend to consult is authorised to give advice. Qualifications can be checked.
As with all other areas of industry, there are some unscrupulous brokers out there. These characters will be biased towards specific lenders that may not offer products best suited to your needs.
In some cases, using a mortgage broker is no better than going through your personal bank. If you have savings account(s) with your bank it may be better to talk to them first.