Whether you are searching for the first time or have had a mortgage before, you will know that the mortgage market offers a practically overwhelming choice of products. It is difficult to know where to start and to decide which mortgage is likely to most suit your particular needs, requirements, and circumstances.
It may be difficult making that choice, but it is essential to get it right. A mortgage is a long-term commitment and, if you get it wrong, you might be left with many years’ of grappling with an unsuitable product that is costing you considerable unnecessary expense.
Your mortgage broker to the rescue
The role of a mortgage broker is to help you avoid just these pitfalls. Their training, expertise and professionalism are marshalled with the sole aim of matching your particular requirements with the mortgage products available.
Why use a mortgage broker?
The immediate appeal of using a mortgage broker may be in their saving you a considerable amount of time and stress, explained an article in Which? magazine in March 2020.
But it is in the way they make those savings that the broker’s professionalism comes to the fore. Working with your sole best interests in mind, the broker must be qualified to give mortgage advice to you. When they give that advice, they have an explicit duty of care to you and your financial interests – that is written into each mortgage broker’s authorisation and regulation by the Financial Conduct Authority (FCA).
If a broker recommends a particular mortgage product to you, he or she is obliged to explain and justify why that mortgage is the most suitable one for you – and if you subsequently discover that the advice was faulty in some way, you may complain to the Financial Ombudsman Service.
Choosing your mortgage broker
When choosing your mortgage broker, it is essential to recognise that different brokers offer different types of service – you need to establish the kind of broker with whom you are dealing.
The widest and most comprehensive level of service, for example, is likely to be given by a so-called “whole of market” broker. The whole of market refers to the fact that this type of broker deals with lenders throughout the mortgage market.
That differs from a mortgage broker who deals with a limited “panel” of approved lenders – and who recommends mortgage products from those lenders only. A mortgage adviser based in your bank or building society is going to have an even more restricted role in recommending to you only those mortgage products issued by his or her employers.
We have mentioned some mortgage deals that may be available only when dealing with a broker. Conversely, there are also some mortgage products described as direct-only mortgages – they are available only if you apply directly to the lender, without a broker acting as your intermediary.
You might want to establish whether your chosen broker will nevertheless recommend such direct-only mortgages if they offer a more suitable deal for you – bearing in mind that some brokers may decline to recommend such deals.
The tools used by a mortgage broker
Your mortgage broker will be looking to match your unique needs and circumstances to suitable mortgage products.
To do this, your broker needs an expert knowledge of the whole of the mortgage market and a keen grasp of the features likely to make one or more mortgage products suitable for your particular needs.
As an independent professional, your mortgage broker is likely to have access to specialist software that allows him or her to search mortgage deals more comprehensively than you could probably manage yourself – including those deals which lenders have chosen to make available only through brokers and not widely marketed across the whole of the sector.
One of the major goals of your broker will be to recommend suitable mortgage deals to you. When doing so, your broker will aim to have identified those lenders might likely to accept an application from you.
In helping to steer you away from those deals which you are unlikely to get, a broker safeguards against unnecessary rejections – which themselves might harm your credit rating and, so, your eligibility for future deals.
What will your broker charge?
The majority of mortgage brokers make their living through the commissions they charge lenders for finding them customers.
Some lenders may also charge you a fee for their services – either as a percentage of the amount you are looking to borrow or as a flat-rate fee. If they aim to charge you, of course, they need to make crystal clear in advance the amount to be charged. You can read our article here for more information – What amount of fees do mortgage brokers charge?