Ready to start looking for a mortgage and not sure where to start? Let a mortgage broker guide you. They have access to deals that aren't always available on the high street.
Key points:
A mortgage broker will scour the market to find the best deal for you
They're especially useful if you're self-employed or looking to buy an unusual property
Some brokers are free and some charge a fee
Try to find a broker that looks at all mortgages across the entire market
In the past when you needed a mortgage to buy a new flat or house, you might have popped into your local bank for a chat. These days, many people seek help from independent online mortgage advisors instead. There are hundreds of mortgages available. And some products you'll pass the affordability checks for, while others you may not. So how do you get started? To help you navigate it all, a broker can be a beacon of light guiding you through the mortgage maze.
What does a mortgage broker do?
An independent broker will help you find the best mortgage for you by looking at all of the different deals available.
They'll look into the real costs of different mortgages, by working out how much you'll pay back over the term of the mortgage in interest, and all of the fees involved. Bear in mind that many of the cheapest mortgage rates can come with the highest set-up fees, so it's not always easy to work out which deal is the cheapest.
Brokers will also look into the likelihood of your application being accepted. That prevents you wasting time and money with mortgage applications you're unlikely to succeed with.
Is it better to go with a mortgage broker or direct?
A mortgage broker will take you through the whole mortgage process, which can be especially useful if you're a first-time buyer. And they'll scour the market to find the best deal for you. They'll have access to exclusive deals, which may not be available on the high street. And they're dab hands at finding solutions when you don't quite fit the mould of a standard buyer. That could be if you're self-employed or have erratic earnings for example, or going through a divorce and need to buy a second home to live in.
A broker can also help if you're looking for interest-only deals or want to borrow into your retirement. If affordability is a bit tight, a broker will know which mortgage lenders are more likely to approve your application.They can also help you if you're buying a less conventional property, such as a flat over a shop or a home built using unusual materials. In short, they're highly experienced at applying for mortgages on behalf of those with more complex situations.
What types of mortgage brokers are there?
There are two main types: 1. Whole of market brokers
Whole of market brokers will recommend products from across the entire market. They're generally the best type to consult as they'll assess every mortgage out there to find the best deal for you. 2. Tied or multi-tied mortgage brokers
Tied mortgage brokers only look at products from deals offered by a small group of lenders. They can often get excellent rates, but they're much more limited in the type of mortgages that they can recommend, so you may find better options elsewhere.
What's the difference between traditional and online mortgage brokers?
With traditional brokers, an individual will guide you through the application process. They'll also act as a point of contact between you and the lender. With an online or digital broker, a computer does most of the work selecting the best mortgage for you, via a chatbot. However, even when you're using an online broker service, a real life broker will step in at some point to make sure your application is correct and legally binding.
Unsurprisingly, online brokers tend to be cheaper to use than traditional brokers. In fact, many online brokers are free. Mojo Mortgages are Zoopla's trusted online mortgage broker.
When deciding which type of broker to use, think about how much you'll want to speak to someone over the phone or face-to-face. If you're happy doing everything online, an online broker may be right for you.
How much does a mortgage broker cost?
Some mortgage brokers are free. They make money by earning a commission paid by the lender when they arrange a mortgage.
Other brokers charge a fee. The fee can either be a flat rate of around £500 or a percentage of the amount you're borrowing.
Make sure you know how much you'll be charged before signing up. Remember, you may also have to pay mortgage arrangement fees on top of the fees you pay to a broker. That said, a good mortgage broker should be able to save you money in the long run by finding the cheapest mortgage for you.
How do I find a good mortgage broker?
You'll need a firm with top-notch customer service and a good reputation. Look for recommendations from friends and family - and always check reviews to see what people are saying about a particular firm.
Unbiased.co.uk and Vouchedfor.co.uk are great places to start your search for an independent broker.