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How to decide if you need a mortgage broker

28th January 2018

Before deciding on a mortgage, there are three routes you can take. You could get advice from a bank, get advice from a mortgage broker, or you could forgo all advice and do it yourself with an execution-only application.

Going it alone when it comes to a mortgage is a risky option. With an execution-only application, you will need to take full responsibility for your mortgage decision and you could end up with the wrong mortgage for your situation – you could even be outright rejected by your chosen lender. Although bank mortgage advice is much less of a risk and a free option, it’s not perfect. As banks will offer their own mortgages, they are very likely to push you towards choosing one of them, with no guarantee of impartial advice.

This is where mortgage brokers come in.

 

What does a mortgage broker do?

Mortgage brokers are specialists with in-depth knowledge of mortgage markets, giving them the knowledge required to find their customers a mortgage ideal for their situation. They look at a variety of mortgages to decide on the best option for you, based on your financial situation. Although they won’t be able to advise you on mortgages only available directly through a lender, they are obliged to give you impartial advice, regulated by the Financial Conduct Authority (FCA).

Unlike banks or building societies, mortgage brokers often require a fee. This could be charged as an hourly, daily or weekly rate, or as a flat fee or percentage of the mortgage you ultimately borrow.

 

Why use a mortgage broker?

The most important factor that draws people to mortgage brokers is that a broker works for you, they’re on your side. Lenders will only suggest options beneficial to them, meaning that you could be pushed into an option a lot more expensive than those offered by their competitors. Furthermore, as mortgage brokers work for you and shouldn’t be trying to sell anything to you, they’ll let you know about any costs that may be involved beyond the interest rate.

As mortgage brokers have a detailed knowledge of the market, they’ll know which mortgages would be best for you, no matter your financial situation. Applying for mortgages can be a long, complicated process, so having an advisor on your side is likely to be highly beneficial. In addition, they’ll often complete any paperwork required for your application too, allowing you to complete your application faster, without getting bogged down in small details.

Although mortgage brokers are useful for anybody looking to get a mortgage without being pushed by their bank or having to do mountains of their own research, they are particularly suited to people in unusual financial situations. For instance, mortgage brokers are ideal for those relying on irregular or freelance income. As mortgage brokers have a broad knowledge of the mortgage market, they are likely to be aware of lenders who are more suited to people with an irregular income.

 

What can I do?

So you’ve decided that a mortgage broker will be the best possible option for you. It may feel as though you just need to find a broker and they’ll secure the perfect mortgage for you. However, that’s not the case.

Although going with a broker relieves a lot of the pressure of choosing a mortgage, it doesn’t mean that you should wash your hands of the process entirely. Your most important role in the process is to shop around for a good broker. Although many estate agents will push for you to take their own mortgage broker, it’s very important that you look elsewhere – your mortgage is likely to be the biggest financial commitment you make, after all.

Compare brokers by checking reviews from other customers, as well as looking at the ways in which they require payment. You should also make sure your broker is working entirely independently and covers ‘whole of market’ to ensure that you are getting the broadest possible view of the mortgage market appropriate for you. Finally, you should still research and build up a working knowledge of the market. Although you’ll have somebody to cover the more complex aspects of getting a mortgage, you should make sure that you understand the markets enough to understand what your broker is suggesting to you.

 

Whatever option you decide to take when taking out a mortgage, it’s important to seek out impartial financial advice. If you’re still unsure if a mortgage broker is right for you, get in touch with the friendly IMC team and one of our experienced advisors will be happy to help.

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