Put simply, a mortgage broker is an intermediary who will help you to find and arrange a deal on your mortgage.
The advice they give is tailored to your individual needs and circumstances
Not only will they be able to tell you what size mortgage you’re likely to get based on your income and outgoings, they can also give you expert advice on the right mortgage for you.
And let’s face it, if you are buying a home or remortgaging, the huge choice of mortgages available can seem daunting to say the least!
Are There Different Types of Mortgage Broker?
Mortgage brokers differ on the range of deals they are able to access and consequently, the scope of advice they are able to offer.
The different types of broker include:
- • Tied mortgage brokers - Offer mortgage products available from a single lender
- • Multi-tied mortgage brokers - Offer access to products from a select panel of lenders
- • Whole of market brokers - Offer access to all of the mortgage products on the market made available to mortgage brokers
In general, whole of market mortgage brokers will be your best option as they are free to find you the best deal on your mortgage by comparing all of the options made available to them without being restricted to certain products or lenders.
Are Mortgage Brokers Regulated?
Mortgage brokers are regulated by the Financial Conduct Authority (FCA).
When a mortgage broker makes a product recommendation to a client, he or she gives financial advice.
This means that mortgage brokers must have qualifications in order to operate within their field and that they have a duty of care to their clients to give the best advice possible.
If you take out a mortgage via a broker and it later transpires that you’ve done so based on incorrect information or an error, you’ll have recourse to complain and seek compensation.
How are Mortgage Brokers Paid?
Some brokers will be paid in commission by the lender.
These brokers typically advertise themselves as 'fee free' and their services will be at no additional cost to you.
Other 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.
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.
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.
What are the Advantages of Using a Mortgage Broker?
There are many advantages to using a mortgage broker such as:
- • A broker has access to lots of different mortgages, including some which you might not be able find anywhere else, saving you the time and hassle of approaching lots of individual lenders to see what they offer.
- • A broker will have the experience, connections and technology to assess your financial situation and compare the different mortgage products and deals available and recommend a loan option that's right for you.
- • A broker will be able to suggest which lenders will be most likely to approve your application, removing the risk that you will damage your credit history by getting multiple applications rejected.
- • A broker will have in-depth knowledge of the habits and anomalies of different lenders.
- • A broker deals with lenders on a day-to-day basis – they'll know what the application process is like for each one and which lender can process things with minimal delays.
- • A broker may put a lot of business to a lender which means they can exert influence and chase things in a way you just can't do by yourself – and that can be invaluable should things get held up.
- • A broker isn’t on the lender’s side, they’re on yours.
Mark recently used our services for a residential mortgage.
We placed the application with a well-known lender who deals with seafarers on a regular basis.
However, the underwriter initially declined the application, citing the reason that they do not allow seafarers who are paid out of tax havens (which is the vast majority of seafarers!).
If Mark had gone directly to the lender then he would have probably left it there, and tried to get a loan elsewhere, wasting valuable time and impacting on his credit score.
Because of our in-depth knowledge of the industry/each individual lenders criteria along with our contacts at the banks, we were able to successfully appeal this decision and get it overturned within 2 days.
Will Brokers Offer Advice on Mortgage Protection?
Mortgages are a lot more difficult than they first appear.
Knowing what rate, term, lender, features and insurance to get are all time-consuming and complex matters.
Mortgage brokers are specially trained and qualified to give you the best advice possible and good brokers aren’t just here to advise on your mortgage alone.
They will also look at any related life insurance, payment protection and even buildings and contents cover you have.
They will recommend insurance based on your new mortgage arrangements to make sure you are fully protected.
A mortgage broker takes your whole circumstances into account to recommend a suitable product.
It’s this thorough, professional look at your finances that makes their advice worth its weight in gold.
If you would like to discuss your mortgage options get in touch with us to arrange a consultation.
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A Step by Step Guide to the Home Buying Process
Disclaimer: Mortgages for Yacht Crew does not provide advice in relation to savings and investments. This article is intended for discussion only and does not propose financial advice in any way, and therefore should not be construed as such. Your property may be repossessed if you do not keep up with mortgage repayments.