Want to know out more about choosing a mortgage adviser?
Finding a mortgage in the digital age is far simpler than it used to be and most people turn to the internet to find the best deal for their circumstances. However, the role of mortgage adviser is still a valued one and the right professional could save you time and money.
In this feature, we take a look at what a mortgage broker does, the benefits of choosing one and things to consider when choosing a mortgage adviser.
What Does a Mortgage Broker Do?
Quite simply, a mortgage broker is a specialist financial adviser.
They work by getting to understand their clients’ financial position and finding the right mortgage to suit their budget, personal credit history and the size of the available deposit.
They should be fully trained and qualified with an appropriate Certificate in Mortgage Advice & Practice (CeMAP) and may also hold a diploma for Financial Planning. A mortgage adviser must be regulated by the Financial Conduct Authority (FCA) and they have a duty of care to provide responsible advice based on your circumstances.
They will be able to show you a range of mortgages and options which should be clearly presented with the following information:
- Type of mortgage (fixed, variable, repayment, capped etc)
- Term of the loan
- Interest rates and how these may change
- Monthly repayments
- Any mortgage arrangement fees
- Any fees payable to the mortgage adviser
Depending on the kind of mortgage adviser you choose (see below), they will offer you a selection of mortgages you may be eligible for from a selection of pre-selected partners or a comprehensive choice from the market.
Types of Mortgage Broker
There are three main types of mortgage broker:
- Whole Market
Whole Market Mortgage Brokers
A mortgage adviser who is not employed by a lender or linked to a panel of ‘approved’ lenders is called an independent mortgage adviser.
Often self-employed or working for a firm of IFAs, they are often very experienced financial advisers. Not being tied to a narrow selection of products, they can provide clients with a range of mortgages from across the market.
Crucially, being free from any links to preferred lenders, they can offer you impartial advice.
Tied Mortgage Brokers
A tied mortgage broker is an adviser who is employed by a single lender. They can only offer you the products available from this particular mortgage company so they are extremely restricted in what they can offer.
However, this can sometimes mean that they have access to exclusive offers and rates which are not available through an independent mortgage broker.
Multi-Tied Mortgage Brokers
A hybrid between a true ‘independent’ mortgage broker and one who is tied to a single lender, a multi-tied broker works with a limited panel of mortgage lenders. Although the offering is more extensive than that provided by a tied mortgage broker, the panel of lenders is commonly chosen using a narrow set of parameters; often this is based on the kind of commission offered to the broker and not the best deals for the customer.
Why Should You Use a Mortgage Broker?
With so many comparison websites available to the layman, the question of whether you should use a mortgage broker or not is quite common in our industry. Whilst we can’t answer that question for you, we can give you some good reasons why using a mortgage broker is a good idea.
As we’ve said before, mortgage brokers are qualified and trained financial advisers who have extensive knowledge of the market. Governed by the FCA they are duty bound to giving you the best advice they can along with reasons for any recommendations they make. The beauty of this arrangement is that if you end up choosing the wrong product or you feel like you were mis-sold then you can use the Financial Ombudsman Service to complain; this is not available to you if you use a mortgage comparison website.
As well as being protected in the choice you make, a mortgage broker can save you a lot of time when it comes to shopping around plus, as property professionals, they can also help you speed up the process of arranging a mortgage. This can be extremely helpful when navigating the (sometimes) complex process of getting additional home surveys and valuation reports for your lender.
Lastly, a mortgage broker could save you a lot of money. Yes, there are some great comparison websites out there and, with the right knowledge and time on your hands, you could secure a great deal without having to pay commission to a mortgage adviser….but, you are more likely to be able to find the best deal with some professional help.
Which brings us to the flip side of choosing a mortgage broker…fees.
Most financial advisers who offer a mortgage produce will be paid via commission. Often this can be a fixed fee but some receive a percentage of the mortgage loan itself. Often around 1%, this could be a costly addition to the overall price of your loan.
Another potential downside (depending on how you look at it) with mortgage brokers is the cross-sell.
A term used to describe the practice of selling additional services to existing customers, mortgage brokers can sometimes use the opportunity of arranging your mortgage to offer additional services such as insurance.
Tips for Choosing a Mortgage Adviser
So, how do you go about choosing a good mortgage broker?
- Ask for recommendations from the people you trust. If you have friends or family who have used the services of a good mortgage adviser then get the details from them.
- Use the Unbiased Using the TrustPilot review system, you can find a local adviser based on the kind of the product and service you are looking for and see recent reviews and testimonials before you make contact.
- Always check the credentials of any financial adviser using the FCA website.
- Consider your own bank. Whilst they may only be able to help you with their own selection of products, their own mortgage advisers may be able to give you a good selection of exclusive rates suitable for your personal circumstances. At very least, you should always compare any product you are offered from another company with one that you can get quickly and easily through your own bank.
- Always ensure that you fully understand how your mortgage broker is to be paid. It is a condition of their FCA approval that their commission is 100% transparent and that they detail in advance the type of commission or free structure they receive for their services.
Lastly, you should be wary of estate agents who insist on you using their own mortgage brokers as a means to ‘securing’ a property or hastening the sale process. You are under no obligation to do so and your choice of mortgage advisor should have no bearing on the efficient and smooth completion of the transaction. By all means, ask for a recommendation of anyone they know who offers a good service but there shouldn’t be any strings attached.
Property Assistant and Arranging Your Mortgage
Property Assistant is not a financial services adviser and we cannot give you advice on how and with whom you should arrange our property loan. However, we do understand that making the decision to buy a home is an important one which is why we go to any lengths to make sure you can make best informed decisions about the property you are considering purchasing.
We work hard to keep clients in the know and hope you will consider us to partner you when it comes to buying (or selling) your next home.
To find out more or to get a copy of our free home buying guide, contact us today on 0118 912 2370.