We show you how to find a qualified mortgage broker and how they can help you find the best mortgage deal for your needs.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
A mortgage broker will be able to source you a mortgage that suits your needs. They will be able to compare mortgages from many different lenders.
A broker can also help you if you have specialist mortgage needs.
Some brokers will be experts in sourcing certain types of mortgages, for example if you are wanting to buy a listed building, or you are self-employed and have less than 3 years’ worth of accounts.
Remember that every unsuccessful mortgage application may harm your chances of success next time around, as each refusal will appear on your credit record.
Using a mortgage adviser will maximise your chances of being accepted first time.
A mortgage broker will have access to more deals and this is important as the difference between taking out a mediocre mortgage rather than the best possible deal for your circumstances can end up being costly.
For example, the difference between paying a rate of 4.5% and 6% on a £100,000 mortgage over a 20-year term is £1,030 a year.
This adds up to a total of £20,600 over the whole of the mortgage. This is money that might be better saved into a pension or ISA (links).
Personal recommendations are always a good place to start. It is reassuring to have the testimony of someone who has used the broker and been happy with both the service and the mortgage deal they provided.
It is also important to interview a potential broker yourself to ensure that they are sufficiently able to help you.
A conversation over the phone can act as an initial filter, if you are happy with the broker then you can arrange a meeting with them.
A face to face conversation will mean you can then get a real feel for both the knowledge and competency of that mortgage broker.
If you want to proceed with your mortgage broker you can then ask them the following questions.
A mortgage broker will need to hold 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).
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. This not only means you will receive a certain quality of advice, but it will 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.
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.
A mortgage broker should be able to:
Explain the various mortgages available and the different types of deals
Advise you on how much you can afford to borrow
Have access to special mortgage deals that are not available on the open market
Help you prepare for your application to boost your chances of success
Be able to save you money overall by finding a mortgage with lower interest rates and fees
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.
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.
Some brokers will be online only, in which case you will need to check when you can contact them and how long to expect a reply.
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 that 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.
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. All mortgage brokers should have some form of PI in place.
Most mortgage brokers will offer to help you arrange insurance products to accompany your mortgage.
Other products sold alongside a mortgage include life assurance, critical illness and income protection and home insurance are usually offered.
When you buy insurance alongside your mortgage check whether your mortgage broker is tied to one particular insurance broker, works from a panel, or is whole of market.
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.
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.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.