About Mortgage Brokers

What is a mortgage broker and what does a mortgage broker do?

A mortgage broker is someone who matches mortgage borrowers with mortgage lenders. Mortgage brokers don’t have mortgages to offer themselves but work on behalf of the mortgage lenders to sell their mortgage products, and on behalf of mortgage borrowers to find them the best mortgage on the market.

A mortgage broker is a specialist in the financial services industry and a professional in the field of mortgages and accompanying mortgage products, such as income protection insurance and so on. Mortgage brokers have a great amount of knowledge about a wide range of mortgages and access to exclusive mortgages that mainstream mortgage advisors may not have. However, unlike independent financial advisers, independent mortgage brokers will only be able to help you with mortgages and mortgage related products. Mortgage brokers will not be able to help you with other financial services such as pensions and investments, so if this is something you also want to sort out, you will need to find an independent financial advisor through www.financialadvisorlocal.co.uk (LINK) in addition to a mortgage broker.

The important thing to remember about a mortgage broker is that they are independent; this means that an independent mortgage broker in the UK is not tied to a specific mortgage company and so can give you completely independent mortgage advice. Independent mortgage brokers can help to narrow down the thousands of mortgages on offer from mortgage lenders to find the best mortgage for you.

Why should you use a mortgage broker?

Whether you’re a first time buyer looking for a new mortgage, someone looking for a mortgage to buy a second home, or someone buying a property to let and looking for a buy-to-let mortgage, a mortgage broker has the knowledge to be able to find you the mortgage you need, because they are mortgage product specialists. Since mortgage brokers are mortgage specialists, they have an advantage over most independent financial advisors who will not know the mortgage industry as well as a mortgage broker.

In addition, mortgage brokers are always independent whereas financial advisors are not. Financial advisors come in two varieties; there are independent financial advisers who can give you independent financial advice including advice about mortgages, and tied agents who advise on products from the financial institution they work for. For example, if you decide to go to a high street building society and speak to their financial adviser about mortgages, they will only give you information and advice on the mortgage products of that building society, because they are tied agents. So even if the bank across the road has a better mortgage to suit you, you will not find out about it from them. However, because UK mortgage brokers are independent they will take a look at all the mortgages high street banks and building societies have to offer. They will also look at what other mortgage companies are offering, some of which will only sell mortgages through mortgage brokers, to find a mortgage to match your circumstances. Effectively, mortgage brokers are a one-stop shop for mortgages and save you from trawling the high street and the Internet for the best mortgage deal.

In a nutshell, the advantage of using a UK mortgage broker is that mortgage brokers should offer you unbiased mortgage advice on a wide range of mortgage products.

How to choose a mortgage broker

You can find mortgage brokers in Leeds, London, Bristol, Manchester or any other town in the UK, and if you want to find a mortgage broker near you, why not use our mortgage broker search above.

Once you have found the contact details for a local mortgage broker, how do you know if that mortgage broker is right for you?

The Financial Services Authority (FSA) regulates all UK mortgage brokers. However, you should also ensure that the mortgage broker you choose has suitable professional indemnity cover.

A mortgage broker should offer a full advice and recommendation service. This means they will ask questions not just about your current financial situation, but also about what you hope to achieve in the future, including kids, promotions and so on, to get an overall picture of your financial situation. Armed with this information, your chosen mortgage broker will then offer you unbiased mortgage advice and should give you mortgage quotations and illustrations in writing.

In terms of mortgage broker costs, you may have to pay an initial fee if you decide to go with the mortgage broker’s recommendations. This is often a percentage of the amount you want to borrow for your mortgage or a percentage of the value of the home you want to purchase. Alternatively your mortgage broker may earn commission from the mortgage lenders for mortgages sold on their behalf. If this is the case, your mortgage broker should state clearly how much commission they will receive from selling you the mortgage.

In addition to the mortgage broker fee, you may also need to pay mortgage arrangement fees, valuation fees and possibly other fees such as a Higher Lending Charge. Again, your mortgage broker should explain all the costs involved with a recommended mortgage.

Before deciding on a mortgage broker, you should establish how much you will be expected to pay, and what service you will be getting for your money. This of course, is in addition to making sure your mortgage broker adheres to the rules of the FSA. Finding these things out upfront is likely to indicate whether you have chosen a good mortgage broker.

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