When you decide to put your search for a mortgage in a broker's hands, you need to be confident that they have the knowledge, qualifications and resources necessary to get you the best deal.
This is all the more important as the difference between settling for a mediocre mortgage rather than best possible deal for your circumstances is likely to be huge in terms of the overall cost. Because of this, being selective about which broker you use is essential.
To put this into perspective, the difference between paying a rate of 4.5% and 6% on a £100,000 mortgage over a 20 year term is over £1,030 a year. This adds up to a difference of more than £20,600 over the course of your mortgage and really emphasises the savings that a good mortgage deal can help you make.
Personal recommendations are always a good place to start as the approval of a former client gives you some idea of the quality of service you can expect yourself. However, you shouldn't let your decision rest on recommendations alone.
It is also important to 'interview' a potential broker yourself to ensure that they are sufficiently able to help you find the best mortgage possible.
While a conversation over the phone is a good starting point and can help you to sort the good from the obviously bad, a face to face meeting is usually best as you will be able to get a real feel for both the knowledge and competency of a potential broker
So, to help you make sure that your broker is the right person to help you arrange your mortgage, we reveal the questions you need to ask...
1. Are you qualified?
Check that any mortgage broker you consider working with holds an FCA recognised qualification such as a CeMAP (ifs School of Finance Certificate in Mortgage Advice and Practice) or Cert MA (Chartered Insurance Institute Certificate in Mortgage Advice).
2. Are you regulated?
All mortgage brokers that operate in the UK must either be regulated by the FCA (Financial Conduct Authority) or be the agent of a regulated firm. Before you begin dealings with any broker it's vital that you check out their credentials. This will not only help ensure that you will receive a certain quality of advice but will also guarantee that you have access to FCA complaints and compensation procedures should there be any problems. You can check whether a broker is regulated by using the FCA register.
3. Are you a 'whole of market' broker?
Ideally you should opt for a 'whole of market' mortgage broker rather than one that works from a selected panel of lenders. Whole of market brokers will include a far greater range of mortgage products in their search (all of those available to mortgage lenders) and will therefore be more likely to find you the best deal available for your circumstances.
4. Do you search direct deals?
Even whole of market brokers don't have to include the direct deals offered by banks and building societies. However, a good broker will still include these offers in their evaluation, even if it means that they later lose out on your custom.
5. How do you operate?
Find out whether they predominantly offer a phone or face to face based service and think about which you would prefer. Ask them to clarify their customer services policy and explain exactly when and how you can get hold of them. A good broker will be readily available to answer any queries you have.
6. How will you be paid?
Some brokers will charge a fee for their service, this will either be on an hourly or flat fee basis and may be charged up front or once your sale has reached completion. Others will be paid in commission by your new lender, these brokers typically advertise themselves as 'fee free' and their services will be at no additional cost to you. Some people prefer to pay a broker fee so as to ensure than any recommendation will be unbiased. However, there are FCA regulated checks in place to monitor the impartiality of lenders working on commission so in theory this shouldn't be an issue. Irrespective of whether they are paid in fees, commission or by a combination of the two, your mortgage lender must make it clear to you up front how they are to be paid for their services.
7. Are you insured?
Check whether the mortgage broker has professional indemnity insurance in place. This is important as it will give you some come back against bad advice.
8. What other products do you offer?
Most mortgage brokers will offer to help you arrange insurance products to accompany your mortgage. Typically life assurance, critical illness and income protection and home insurance are usually offered. This can be a useful service however don't assume that the products they offer will necessarily provide you with the most value for money. Check whether they are tied to one particular insurance broker, work from a panel or search the whole of the market to find the most appropriate products for your circumstances. If the broker doesn't search the whole of the market then it is important to compare relevant insurance products yourself to ensure that you really are getting the best deal.
Bear in mind that how your broker responds to your questions is almost as important as what they say. They should appear open and confident in their responses and be able to answer any questions you have in a way that you can understand.
Finally, it's important that they seem trustworthy and personable, you should come out of any meeting feeling comfortable that they are capable of finding you the best deal possible.
If you have any doubts that they can't allay then start looking for another broker - there is nothing wrong with interviewing several before you settle. Remember that the ability of this person to do their job is going to have a big impact on your finances over the course of your mortgage term.