Brokers play an important role in the mortgage process. They provide you with the most up-to-date information, advice, and recommendations from a network of lenders, which will be discussed further in this article.
Whether you're purchasing your first home, upsizing, downsizing, releasing equity, developing a property, or refinancing an existing mortgage, it's crucial to compare all options available in order to get the very best deal. Using a mortgage broker will allow you to receive unbiased advice about the different types of mortgages available to determine which one will be most suitable for you based on your individual circumstances.
Who regulates mortgage brokers?
The Financial Conduct Authority (FCA) regulates the mortgage market. Brokers must be suitability qualified to provide mortgage advice and require additional qualifications to provide equity release advice.
What does a mortgage broker do?
A broker, also known as an adviser, searches the market for you to find the most suitable lender and product. They will also complete all paperwork and deal directly with the lender on your behalf. In addition, some brokers will also go the extra mile and communicate with any third parties involved in the transaction such as solicitors and estate agents.
What are the different types of mortgage broker?
As a general rule of thumb, there are three different types of brokers available.
Offer advice on deals from a single provider, i.e., a mortgage advisor at a bank or building society, who will recommend products exclusively from that provider.
Multi-tied brokers This type of broker provides advice on a limited range of mortgages from a panel of lenders. A typical panel would consist of 20-50 lenders.
Independent brokers These brokers, also known as whole of market brokers, have access to the entire mortgage market, aside from a few lenders who will only accept business directly from customers. Curzon Financial currently has more than 250 lenders in its whole of market network, and that number is growing month on month.
Brokers should clearly state what types of mortgages they can secure at the beginning of the process. By having more lenders available to you, your options increase and you are more likely to find the best deal or a lender that is willing to help. It is therefore best to pick an independent broker who has access to the entire market when searching for a mortgage.
How to choose a mortgage broker? Do your homework before instructing a broker to act on your behalf. Find a firm online, ask friends, family and colleagues for recommendations, and, most importantly, make sure to check online reviews to verify the adviser and firm’s creditability.
Do brokers charge fees? Most mortgage brokers charge a fee for their services and they also receive commissions from lenders. Mortgage brokers charge varying fees, which are often determined by the complexity of the application. In general, brokers normally charge a fee of around £495.00, while some charge up to 1% of the loan amount.
What are some of the benefits of using a mortgage broker?
Many benefits can be gained from working with a broker. We outline some of the main benefits below. Exclusive deals Brokers may be able to offer products that aren't available to the general public through exclusive deals.
Expert advice As explained above, in order to provide mortgage advice, all mortgage brokers must be suitably qualified. Furthermore, any recommendations made must be backed up by a suitability letter.
Lender knowledge With a broker's guidance, you can approach the lender who will best meet your needs and be the most likely to approve your loan - minimising the risk of being declined by approaching the wrong lender.
Minimal paperwork It is typical for mortgage applications to require lots of paperwork, whether it’s filling out forms or sorting through your own records to provide the necessary supporting documentation. Brokers are familiar with the necessary documents required and forms that need completing and will often handle most of the paperwork for you.
Fully managed service As well as advising you on the paperwork requirements, a mortgage broker will also handle the application process on your behalf and keep you updated on its progress.
Save money As well as saving time, a mortgage broker could save you money as well. Besides looking at the best rate, a good broker will also consider any applicable fees to ensure the most cost-effective option is recommended.
In a nutshell
Brokers simplify the process of obtaining a mortgage by sourcing the most suitable product and managing the entire application process on your behalf. In addition to that, they'll help you understand the full cost of the recommended product, match you directly with a lender who can assist and provide guidance throughout the process.