Using a mortgage adviser ‒ also known as a mortgage broker ‒ has the potential to save you time and money when looking for a mortgage. They will help you find the best mortgage for your circumstances and guide you through the application process. Mortgage brokers may also have access to mortgage deals that you can’t get if you apply to a lender directly.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it
What is a mortgage broker or adviser?
A mortgage adviser is someone with specialist knowledge of mortgages who is qualified to give advice on which mortgage products and deals best suit you and your needs. Mortgage advisers and mortgage brokers are one and the same thing. However, it’s important to recognise that there are different types of adviser or broker, depending on the range of mortgages that they can access and recommend.
Types of mortgage broker
Some mortgage advisers may work for a bank or building society and can only discuss the mortgages available from that one lender. Others may work for themselves, within a brokerage or another business such as an estate agent, and can only recommend mortgages from a set panel of lenders. There are also mortgage advisers that have access to most of the mortgage market – this is known as ‘whole of market’ – providing you with the widest choice of deals.
However, even if an adviser is a whole-of-market adviser, there will be other mortgage deals that are only available by going direct to lenders. Equally though, there may be deals that you can only get through a mortgage adviser.
What does a mortgage broker do?
Typically, you can expect a mortgage adviser or broker to establish how much you can borrow and the level of mortgage you can afford. They will explain and recommend the types of mortgage you may want to consider based on your circumstances and preferences, and are usually on hand to guide you through the mortgage process and help with paperwork.
The recommendations you get from a mortgage broker should be explained and documented. Other things you may want to consider related to getting a mortgage, such as arranging life insurance, are highlighted too.
Do I need mortgage advice?
Getting mortgage advice can be invaluable if you’re in any way uncertain about the type of mortgage you need or should get. Equally, you may have a good understanding of mortgages, and think you know which one you want, but would like reassurance it’s the best deal for you.
The alternative to getting mortgage advice is to choose a deal yourself and approach the mortgage lender directly to apply. But if you don’t have the time or inclination to research different lenders and deals, a mortgage adviser can do this for you and shop around on your behalf.
Mortgage advisers may also prove a useful option if you have more complex requirements or arrangements. For instance, if you are self-employed or have more than one source of income, mortgage advisers usually have a good understanding of the criteria that different lenders require borrowers to meet.
What are the benefits of using a mortgage broker?
The main advantages of using a mortgage adviser include:
- the guidance and support you get throughout the process
- potential access to exclusive deals you can’t get direct
- completing all of the paperwork on your behalf
- a detailed explanation of all costs and fees involved
- advice and a final recommendation on a mortgage that’s suitable for you
- benefiting from their knowledge of which lenders are more likely to accept you and which may reject you
- saving time and effort at the research stage
- the right to make a formal complaint if the mortgage proves to be unsuitable
Why should I use a mortgage broker?
A major benefit of using an independent mortgage adviser who isn’t tied to a particular lender is the choice of mortgage lenders and mortgage products. Some mortgage advisers have access to products available across almost the whole market including from lenders that only offer their products through advisers ‒ they won’t lend to you directly.
Mortgage brokers are often better equipped to help with complex mortgage needs, including if you have poor credit or need a specialist mortgage. Even if you have straightforward circumstances, a mortgage adviser can help you establish precisely what sort of product meets your needs and personal situation. For example, if you like the certainty of knowing how much your monthly repayments will be, you may be recommended a fixed-rate mortgage, where your repayments won’t change for a set period of time.
A mortgage adviser can also take some of the stress out of the process by completing the application on your behalf and working with the lender if there are any delays. They will also be able to help you arrange protection such as life insurance, critical illness or unemployment cover, which could help you or your loved ones keep up your mortgage payments if your circumstances change.
If you receive formal mortgage advice from a mortgage broker, this may also allow you to make a complaint to the Financial Ombudsman Service if the mortgage deal turns out to be different than you expected. Without this advice, you will take full responsibility for the final decision you make.
What should I be aware of before using a mortgage broker?
It is always important to check with a mortgage adviser whether they make recommendations from a select panel of lenders or have a wider whole-of-market view. Also remember that mortgage advisers at banks and building societies will only be allowed to advise on mortgage deals that the lender they work for offers.
Note as well that there may be fees and charges for using a mortgage adviser. But while these may add to the initial cost of securing a mortgage, an adviser may find you a deal that means you end up saving money overall in the longer term.
Mortgage broker fees
Some mortgage advisers will charge you for their advice while others may not. If you get advice from a fee-free broker and don’t have to pay anything yourself, the broker will make its money through commission from the lender it recommends.
Where you are charged by the broker for mortgage advice yourself, it may be a fixed fee, perhaps by the hour, or a percentage of the sum you are borrowing. Brokers will still receive a commission from the lenders they recommend.
Advisers must make you aware of all the fees you’re expected to pay, and any other ways they may be paid.
You may have the option to add the mortgage broker fee to your mortgage loan, but this would mean paying interest on it for the whole mortgage term.
Are there benefits of going directly to a lender?
Lenders may offer some mortgage deals that you can only apply for directly, and not through a broker. And some lenders won’t accept applications from brokers at all. Approaching a lender directly also means you will save on mortgage broker fees. However, it might be countered that an adviser could find you a better deal that will more than pay for those fees over the longer term.
Banks and building societies may still have their own mortgage advisers who will work out how much you can afford to borrow, offer you advice and guide you through the process. They can also recommend the best mortgage from their own range of deals, though not products from other lenders.
What questions should I ask a mortgage adviser?
There are a few important questions you need to ask any adviser before you enlist their services.
- What do you charge for your advice? You need to know precisely what their advice is going to cost you, as well as when that fee will be charged. You may also want to ask if you must still pay if your home purchase falls through.
- Are you whole-of-market? Whole-of-market brokers will cover more of the market and have access to a larger number of deals than a broker who works with a limited panel of lenders.
- What is included as part of your service? Check whether they will complete the mortgage application on your behalf or be on hand to help you if needed. Also ask if they’ll deal directly with the lender and chase them if needed.
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