If you take out a mortgage, you can find one directly, talk to your bank or building society or get advice from a mortgage broker. When I’ve remortgaged, I’ve usually used a mortgage broker because I think a good one is worth it. Here are my tips on how to find a good mortgage broker.
How to find a good mortgage broker
There are thousands of mortgage brokers around so finding one isn’t difficult. But for them to be able to get the best deal, they must be truly independent and have access to mortgage deals from the whole market.
A good mortgage broker should:
1. Find you a good deal to suit your specific circumstances. According to some research carried out by a firm of mortgage brokers, when people compare mortgage deals themselves they often don’t pick the one that’s the best value. You might think ‘well, they would say that, wouldn’t they?’. But in my experience, upfront fees and charges make it much harder to compare different deals.
2. Find a lender that is more flexible in its lending approach. This is particularly important if you’re self employed (especially if you’ve only been self employed for a few years) or if your circumstances have changed.
SAVVY TIP: Although mortgage lenders have become much stricter about who they will lend to, they don’t all take the same view. Some use automated credit scoring and others use a human to underwrite the loan (which means a real person will assess how risky you are).
3. Recommend a lender who is good at processing applications and doing the admin, not just one with a competitive rate. Some lenders may be busier at certain times — such as if they have an IT upgrade — and others may just be slow at processing applications.
4. Take into account issues like flexibility and upfront charges. If you want a mortgage that will let you make extra payments without incurring a penalty, or if you want to avoid a mortgage with lots of upfront charges, a mortgage broker can find one that suits your needs.
5. Do much of the chasing on your behalf. Some mortgage lenders process applications very quickly but others don’t. A good mortgage broker should try and move things along for you.
Where to look for a good mortgage broker
There are several ways of finding a good mortgage broker. Here are some suggestions:
1. Talk to friends and family who have remortgaged or bought a property. If they’ve used a mortgage broker and were happy with him or her, ask them what the broker did to go the extra mile.
2. Look at the personal finance pages of the papers (either online or offline). See who’s regularly quoted in mortgage-related articles.
SAVVY TIP: These brokers are not being endorsed by the publication, but normally journalists will try and quote someone who’s respected in their field.
3. Use a review or listings website. There are several websites that list mortgage brokers, such as Unbiased.co.uk (which is a directory for mortgage brokers, independent financial advisers and solicitors). Vouchedfor is another ratings or review site to try.
SAVVY TIP: Check that the broker is authorised by the Financial Conduct Authority. You can do this by looking up the firm’s name on the FCA register.
4. Avoid a mortgage broker who’s tied to an estate agent if you can. That’s because many of them use a ‘panel’ of mortgage lenders, which means they restrict themselves to (typically) a few dozen different banks and building societies, although some brokers use as few as nine lenders.
SAVVY TIP: If you don’t use a mortgage broker linked to an estate agency, you also won’t put the broker in a position where they can pass information to the estate agent about how much you can afford. It’s illegal for estate agents to imply that you’re more likely to get the property you’re after if you use their mortgage broker — but that doesn’t stop a few pushy agents from doing that.
What to ask the broker
When you’re choosing a mortgage broker, ask them if they look at the whole market or operate a panel of mortgage lenders. A panel is a selection of banks and building societies that the mortgage broker will arrange mortgages through. Some mortgage brokers have an extensive panel (which could be several dozen lenders), others use far fewer.
SAVVY TIP: The mortgage broker has to tell you how many lenders make up their panel.
Paying a mortgage broker
Most of the time you will have to pay the mortgage broker for advice, although some independent mortgage brokers take a fee from the mortgage lender instead. You must be told how much advice will cost and how you can pay. You may have to pay:
- No fee at all. Here the mortgage broker will be paid — typically several hundred pounds — by the bank or building society it recommends once you’ve taken out the mortgage.
- A flat fee. This could be an hourly rate or a set fee for a specific job.
- A fee related to the value of the mortgage. Some brokers charge a fee of up to 1% of the loan (although a more typical level is 0.4%-0.5%).
SAVVY TIP: Don’t confuse these with mortgage fees, which are costs and fees charged by the mortgage lender for taking out a particular product. These aren’t something that the mortgage broker can control.
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