Using a mortgage broker can save you a lot of hard work and stress, and can help to ensure you end up with the right mortgage for you.
If you are thinking of applying for a mortgage, you may be tempted to apply directly to your current bank or building society, especially if you have banked with them for some time. However, if you want to be sure you have secured a competitive mortgage deal, it’s worth getting a mortgage broker to do the hard work on your behalf.
What does a mortgage broker do?
A mortgage broker, also known as a mortgage adviser, can offer you specialist, in-depth knowledge of the market and shop around to find the right mortgage product for you. ‘We can save applicants a considerable amount of time by being up to date with the lenders’ ever-changing criteria for getting a mortgage and affordability calculations from across the market to save you having to work out who will do what and when,’ says Shaun De Moura, MBA’s Senior Mortgage Protection Adviser. ‘We get told in advance if products or criteria are changing and this could help massively in saving the client time and potential heartbreak thinking they were going to go with a certain lender, and then discovering that the criteria has been changed or income multiples used to calculate what they can borrow have been reduced.’
What information do they need from you?
So what does the process of dealing with a mortgage broker involve? Firstly, you will be invited to a meeting – either over the phone or in person – in order for a broker to find out more about you. They will ask you what you’d ideally like to borrow and will need details of your current earnings, monthly outgoings and any loans or credit card balances. They will need to see your passport or driving licence as proof of ID, proof of address, three months’ worth of bank statements, copies of any credit card or loan statements showing your current balance, and proof of your deposit (a savings account statement is fine).
If you already have a mortgage, they will need to know the balance owed on your existing mortgage and who your lender is. They will also ask what the current monthly payments are and how long you have left on your current mortgage deal before it expires.
The more information you can provide, the better. If the amount you are hoping to borrow is unrealistic based on your current earnings and/or available deposit, a broker will give you honest, realistic advice, so that you can view other properties within your price range. However, if your requirements seem realistic based on your earnings, they will get to work on your behalf and try to find a mortgage offer to suit you.
What if your situation is complex?
A good mortgage broker will also take into account complex situations – for instance, if you’ve recently been furloughed but want to apply for a mortgage they will gladly help. If you are self-employed and your earnings have fluctuated over the years, they will advise you on what you may be able to borrow.
Another benefit of dealing with a mortgage broker is that you have one key point of contact rather than dealing with different call centre staff. You won’t have to wait on the phone to get help or have your questions answered. A good broker will be accessible on the phone or by email and should be answering your questions promptly. They will also be familiar with what stage your application is up to so that you don’t have to repeat information when you speak to them.
Most importantly, a reputable mortgage broker will aim to get you a suitable mortgage offer. If they are well established they will most likely have access to a range of competitive mortgage products. ‘We get exclusive deals from lenders and benefit from “buying in bulk” as part of one of the largest mortgage networks in the UK,’ says Shaun. ‘This means we could provide clients with a better rate than if they were to go direct to the lender.’
Above all, a good mortgage broker will always act in your best interests and ensure that your mortgage product is affordable for you.
Once you have established a relationship with your broker, they will be there for you in the future when you decide to switch to a new mortgage. If for instance, you take out a mortgage with a two or five-year fixed rate, they will be able to move it to a more competitive lender when it expires, so that you continue to get the best rate.
What do you have to pay a broker?
You may be wondering what you will have to pay a mortgage broker for their time. They earn a procuration fee from the lender (i.e. they are paid by the lender) – normally a percentage of the sum you have borrowed. Some brokers may charge an admin fee depending on how much time they invest. However, they should explain this to you from the start.
Saving you money
Getting advice from a broker rather than going directly to a lender is advisable so that you get the right mortgage for you. It could save you a lot of money in the long-term. Another reason to use one is that there may be less risk of getting rejected from a lender because you were unaware of any restrictions they may have. An experienced broker should be able to confidently assess your current situation and then know which mortgage product suits your needs, so that you have the best chance of success.
On a wider level, a mortgage broker can assist you with protecting your finances, such as arranging critical illness cover or life cover, income protection insurance and even business protection insurance.