What does a mortgage broker do that you can’t? And why should you pay for their services, when there are loads of other costs when moving home or remortgaging?
But however tempting it is to cut out the middleman when searching for a new mortgage, you might want to think twice.
An important thing to understand is that when you receive mortgage advice, your mortgage broker has a duty of care to you.
They have to recommend a suitable mortgage and be able to justify why the particular mortgage they have chosen is right for you.
If their advice is not up to scratch you can complain and be compensated.
A mortgage broker is qualified
There’s an awful lot to think about when choosing the right mortgage. It’s not as simple as just opting for the cheapest fixed or tracker rate mortgage you can find!
A broker is on your side
An independent mortgage broker will look for the best mortgage for you. They aren’t on the lender’s side, they’re on yours, and they’ll give you access to far more products than if you went direct. You’d get unbiased advice and could choose from a range of lenders and subsequent products, rather than being restricted to the single range of the lender you went to.
They know the industry
Mortgage criteria has tightened massively over the past few years, with the Mortgage Market Review being the latest, and arguably widest-ranging, development. It’s been designed to ensure borrowers can prove affordability, even in the event of a rate rise, and those extra checks have understandably increased application times.
That’s why it’s so important to stay in the loop – and to have a mortgage broker on your side who understands it all. A broker deals with lenders on a day-to-day basis, so they’ll know what the application process is like for each one and can tell you which lender can process your application with minimal delays.
It’s not just about the mortgage
A mortgage broker won’t just advise you about your mortgage. They will also look at any related life insurance, payment protection and even buildings and contents insurance you have.
They will recommend insurance based on your new mortgage arrangements to make sure you are fully protected in the event of:
- Critical illness (such as cancer, heart attack or stroke)
Don’t be put off by a fee
Mortgage advice tailored to your situation is a service. In order for the mortgage broker to be able to offer this service they need to make money.
They do this by one or both of the following:
- Charging a fee. This could be a one-off fee for advice, or a fee that pays for advice throughout the term of your mortgage (if you need to remortgage, move home, etc.).
- Commission. Lenders and insurers may decide to pay the mortgage broker commission for putting your business their way.
Where can I find out how much my mortgage broker makes?
Mortgage brokers are required to provide you with a Key Facts document about their services – details of any fees or commission they charge or earn can be found in this document.
You will also be provided with a Key Facts Illustration (KFI) about the specific mortgage being recommended.
Details of your broker’s fee can be found in section 8 of the KFI.
Details of any commission earned by your broker for introducing your business to the mortgage lender can be found in section 13 of the KFI.
The value of advice
Mortgages are a lot more difficult than they first appear. Knowing what rate, what term, what lender, what features, what insurance are all time-consuming and complex matters.
A mortgage broker takes your whole circumstances into account to recommend a suitable product, and it’s that thorough, professional look at your finances that makes advice well worth paying for.
Post courtesy of: Mortgage Brokers Bournemouth