What does a mortgage broker do for you? Mortgage brokers work on your behalf to offer financial advice and help find and apply to mortgage deals. Their qualifications and experience typically mean that they can more effectively find the best mortgage deals on the market and help you make better decision when looking for a mortgage.
Entering into the world of mortgages and property can be daunting at first. Mortgage brokers can prove to be a valuable helping hand and a useful resource. Read on to find out exactly what a mortgage broker does and how they can prove to be a valuable asset which can pay for itself.
By understanding exactly what mortgage brokers are and what exactly they can do for you, you can more effectively use them to your advantage. You’re using them anyway, so why not squeeze as much value as possible out of this valuable asset?
Providing mortgage advice
Any good mortgage broker will have academic qualifications and commercial experience in the mortgage world. They will have their finger on the pulse with regards to the latest and greatest mortgage deals available from the different lenders. This means that they should know some of the best deals off the top of their head, without having to do any research.
If you have ever taken the time to apply for a mortgage, only to have your application rejected, you will know how much time is wasted, not to mention the extra effort and communication required to start over again. This can still happen with a mortgage broker, however it should be much less likely.
Mortgage applications can be a confusing business. APR, interest rates, repayment terms, equity – it’s enough to make your head spin. Mortgage advisers can help explain these concepts and offload the work from your brain to theirs, which is a godsend if you’re easily confused (like myself!)
Locating the best mortgage deals
Some of the criteria a mortgage broker might use to find the best deals for you include:
- Your income, credit history and personal circumstances
- Monthly repayment size and length of the mortgage
- Interest rates charged on the mortgage
- Any additional costs attached to the mortgage, eg. an application fee
These factors are crucial as they can determine what mortgage deals you are likely to be accepted for and, perhaps more importantly, what deals you are likely to be able to keep up repayments on going forward.
Applying for a mortgage
Mortgage brokers typically submit the mortgage application on your behalf. When you have decided on the offer that you’d like to go ahead with and completed any application forms, they will submit everything to the lender and handle any communication with them. You may not even have to communicate with the lender directly at all.
Most mortgage lenders require you to take out some level of life insurance. This gives them further security that the mortgage payments will continue to be made even if something happens to you.
Brokers will be able to advise on suitable insurance policies and apply for them too along with your mortgage. Life insurance isn’t a difficult thing to arrange yourself, but having an extra thing taken care of is just a helpful additional service.
Different types of mortgage broker
There are two distinct types of broker, and it’s worth being familiar with each so that you can use the right kind for you needs.
Tied mortgage brokers
These mortgage brokers are usually employed by, or otherwise associated with a lender (typically a bank or building society). They will be limited to the available deals from that particular lender. While their range may be limited, you may find that they are able to get special discounts and find particularly good deals from that lender, so they can be useful.
Independent mortgage brokers
This kind of mortgage broker are able to find the best mortgage deals from a wide range of lenders, as they are not tied to any specific ones. I’d recommend using an independent mortgage broker for finding and applying for deals if you’re looking for that flexibility.
Do I have to pay mortgage brokers?
Usually, mortgage brokers are paid a commission by the lender once a successful mortgage application is made. You may find that some brokers charge you an additional fee. This isn’t a bad thing however, as charging you a small fee means that they are likely to be less biased by the offers that pay the highest commissions.
Fees are typically no higher than £300, although it can vary. You may find that this fee is negotiable if you push for a discount, however personally I’ve not done that as it’s not a large amount considering what’s at stake and I want my broker to be motivated regardless of any secondary commissions.
What should I look for in a mortgage broker?
When looking for a mortgage broker, there are a few factors to consider, some of the main ones include…
- How many years of relevant experience do they have?
- Are they associated with any lender(s) or are they totally independent?
- Do they charge any fees?
- Do they have any positive reviews?
Tips on finding a good mortgage broker
When starting your search for a good mortgage broker, it may be worth asking friends or colleagues if there is one that they recommend. If they had a good experience, then maybe you will too. They may also earn a referral fee from the broker, so there’s an extra benefit for them.
These days, most businesses have a website and online reviews. Take 15 minutes or so to research some brokers local to you and get a feel for which you’d like to follow up.
The bottom line
Mortgage brokers offer a valuable service for their clients. Not only can they save you time and money, but they can save a lot of stress and prevent errors in your application.
Considering the benefits a mortgage broker offers, the downsides are relatively small, which is why there continues to be a thriving industry of mortgage hey are a significant value-add which can save you in the long term.