Do I Need a Mortgage Broker

Deciding on a mortgage can be daunting with such a long-term financial contract on offer. Research, consideration, and planning are paramount to deciding which lender you should approach. Mortgage brokers have become more and more popular, accounting for over 60% of home loan deals in the UK in 2014. Mortgage brokers can often provide better rates on deals, reliable advice, and can even handle all the paperwork for your convenience. All of this comes at a cost though so budget and time are important factors in making this decision. Industry experts predict the number of deals with mortgage brokers to rise so should you follow the trend or go it alone?

We’ve put together this handy guide to give you the best start in making a decision to ensure your mortgage is the best fit for you.

Direct Only vs. Broker Deals

One of the major differences between going with a broker or going alone is the selection of mortgages available. Lenders such as banks and building societies often have home-owner exclusive mortgage plans. This means brokers can’t offer these deals due to their positions and may limit your choices.

Similarly, brokers have access to ‘broker only’ deals meaning homeowners need to consult a mortgage broker to get access to these mortgage plans.

Whole of Market vs. Tied

Not all mortgage brokers are the same, with some independent, some tied to a single lender, and some tied to a panel of lenders. While mortgage brokers tied to a lender or lenders are beholden to their mortgage options, an independent broker has ‘Whole of Market’ access. This independence means these mortgage brokers can search broader and find more offers to fit your needs. This does not mean you should write off mortgage brokers tied to lenders as their relative proximity to their lender may mean they are in a position to offer exclusive deals.

Payment

Mortgage brokering is a business like any other and as such requires payment. While many mortgage brokers take a commission from the lender they will also often charge the homeowner. This is either paid as a flat fee or as a percentage of the mortgage awarded. The percentage fee is agreed upfront so you don’t have to be wary of hidden costs.

Costs that May Harm Your Chances of Getting a Mortgage

Lenders are stricter with mortgages in today’s climate and as such scrutinise prospective customers more intensely. Costs that may affect your chance to get a mortgage include:

• Irregular earnings- This is especially the case with contract work or self-employment. Lenders have started to be more understanding of self-employment in recent history and now consider extended accounts.
• Commuting- Lenders will assess every aspect of your monthly spend including your transport costs.
• Childcare- As with commuting, childcare is a constant cost and lenders take this into consideration when looking at what mortgage you can afford.
• Pension- Some lenders will count your pension payments as a monthly cost. This can mean you will receive lower mortgage offers.
• Any future commitments- This includes all long-term future commitments such as paternity or maternity leave.

The Benefits of a Mortgage Broker

With so much to consider, mortgage brokers can be extremely helpful. Their skillset and connections often mean they are perfectly situated to deal with your specific needs. Beyond this they can offer a range of benefits:

• Brokers know the market and are up to speed with the latest trends, rates, etc.
• Brokers know the practices of lenders and can find the best lender to suit your needs.
• Brokers offer advice, guidance, and advocate for you making the entire process a lot easier.

Helpful Tools For Homeowners

Knowledge is power, so don’t neglect the tools and information at your fingertips. Speaking to someone at your local bank can be a great start. They often know your financial situation and the service is normally free.

The internet also has a lot of resources to help you find mortgages or mortgage brokers.

If you’re considering saving some money and completing the whole process yourself, you can also try comparison websites. They are often good starting points and using several will give you the best sample of what is available. Examples include Which?, Money SuperMarket, Money Saving Expert, and Moneyfacts.co.uk.

Using these resources will help you find the best mortgage for you and ensure you don’t get rejected by your chosen lender or make a costly mistake. Smith Partnership Move are home to helpful, experienced, and convenient conveyancers who are skilled at helping you buy, sell, and re-mortgage properties. Contact one of our many Legal 500 offices for more jargon-free, helpful support and advice.