What does a mortgage broker do that you can't? And why should we pay for their services, when there are loads of other costs when we move home or remortgage?
But however tempting it is to cut out the middleman when searching for a new mortgage, you should think twice.
Mortgage advice, from a reputable broker, can be an invaluable service – and here's why…
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.
In contrast, if you go directly to a high street mortgage lender, don't take advice, and then end up with a mortgage that later becomes unaffordable, you've only yourself to blame.
There's an awful lot to choosing the right mortgage. It's not as simple as just the cheapest fixed or tracker rate mortgage you can find!
Mortgage brokers have to be qualified to give you mortgage advice – a lot of call centre and branch staff aren't qualified to give advice. That said the branch will often be able to arrange an appointment with one of their mortgage advisers.
An independent mortgage broker will look for the best mortgage for you. They aren't on the lender's side, they're on yours!
Mortgage criteria has tightened massively over the past few years.
But a mortgage broker deals with lenders on a day-to-day basis. They know which lenders can process your application without unnecessary delays.
They also know the background criteria that a lender has and can bring this experience to bear when advising you and processing your application.
Because a mortgage broker might put a lot of business to a particular lender in a year, they can exert influence and chase things in a way you just can't do by yourself.
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:
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:
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.
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.
Comparing mortgages on a site like moneyfacts.co.uk is a good place to start – it's great to get an idea of what's out there. But choosing a mortgage is a process far more complicated than simply the lowest rate or the best incentives.
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.
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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.