Buying a property can be one of the most complicated and stressful times of your life. The role of a mortgage broker is to make it easier for you to buy your property, by guiding you through the range of mortgages on offer and finding the best deal for you and your circumstances. Whether you are a first-time buyer, are re-mortgaging or are buying to let, a mortgage broker may make the entire process a lot easier.
What do mortgage brokers do?
Mortgage brokers have specialist knowledge of the lending market. They guide potential buyers, who need to find a mortgage to purchase a property, through the huge range of deals, interest rates and incentives available. The mortgage broker offers financial advice and recommends the most appropriate mortgage for the buyer.
Are all mortgage brokers the same?
Be aware that there are three types of mortgage broker.
- Some are tied to specific lenders or just one lender, which means that they will only recommend these specific mortgages. This type of broker usually charges commission on the mortgage rather than an upfront fee.
- Other brokers can recommend lenders from a ‘panel’ or selection, which represents a limited section of the entire market. They can still claim to be ‘whole of the market’ brokers, as long as the panel on offer is representative of all lenders.
- There are also independent brokers, who are not tied to any lenders. They can recommend lenders from the whole of the market. This means they may be in a better position to offer genuinely impartial advice, although the advantage of tied brokers is sometimes that although they have a limited range of products to offer, they may have better deals on them. ‘Whole of the market’ mortgage brokers usually charge a flat fee upfront.
How do I find a mortgage broker?
Ask around. Word of mouth is the best recommendation for any service. If you think the property you are buying may be difficult to get a mortgage for (for instance, if it is situated above a commercial property, lenders may be reluctant to provide a mortgage), try asking the vendor (the current owner), if he or she can recommend a mortgage broker.
If you are still having problems finding a broker, follow up adverts you see in the press. It is a competitive market, so some may be offering incentives.
Do not settle for the first broker you see. Fees vary, so phone a few to get the lowest price.
At what stage in buying my property do I employ a mortgage broker?
You have been house hunting, have spotted the perfect property and now need to know if you can borrow enough money to snap it up and make it your own.
Alternatively, you may find it useful to have an initial consultation with a mortgage broker before you find a property so that you have a rough idea of how much you will be able to borrow.
What will happen at my first meeting with my mortgage broker?
A broker will assess your financial circumstances in order to establish how much money it is possible for you to borrow. You will be asked about your credit history, income, outgoings, and will be asked to provide a pile of documents to prove your circumstances. Be prepared to dig out pay slips, bank statements, P60s, utility bills, passports…
The broker will discuss the repayments you can afford, the best interest rate, whether it is fixed rate or variable, and will try to get you the best deal for your circumstances.
You will be guided through a lender application form by the broker. Once you have completed this, stating the amount you wish to borrow (on the advice of the broker) this will be submitted to the lender for approval. Following credit checks, the lender may send round a valuer to look at the property you are hoping to buy. The aim of this visit is to establish that, if you are unable to keep up mortgage repayments and the lender needs to sell your property to regain the loan, the property is definitely worth as much as you are asking to borrow. The lender will then make you a mortgage offer.
If you are not happy at any stage, tell the mortgage broker. They will be aware that you can find your own mortgage, without their services, so should be happy to answer any questions you have. Since 2004, mortgage brokers in the United Kingdom have been regulated by the Financial Services Authority.