What to look for when choosing a mortgage broker
Getting a mortgage is a pretty big deal for most people. A good mortgage broker can be a really helpful guide on your home-buying journey.
But what is a mortgage broker exactly?
A mortgage broker is a person who specialises in mortgages. They’re basically an expert in mortgages. They’re the person who’ll help you find the right mortgage for your situation.
How do I pick a good mortgage broker?
To help you pick a good broker, think about the following questions:
1. How much will it cost me?
Brokers can make money in two ways:
- Receiving a commission from the lender. It doesn’t affect what you pay and will always be disclosed to borrowers.
- Charging you a broker fee. If your broker does charge you a fee, this can be anywhere between £500 and £1,000.
Top tip – Avoid any broker that charges upfront or even before you complete your mortgage. In other words, don’t pay unless you get the mortgage.
2. Do you check all the lenders?
Some mortgage brokers are tied to one lender or a small group of lenders. They’re not likely to get you the best deal because they can only offer mortgage deals from the lenders they work with.
The real choice is between 1) a whole-of-market broker and 2) a direct mortgage lender.
A whole-of-market broker is someone who checks all the lenders. However, some ‘direct only’ deals might not be available to them. While you pay for this service, every possible deal available is looked at.
A direct mortgage lender is the bank or building society that provides you with a mortgage directly. These basically cut out the mortgage broker and you might find the few extra ‘direct only’ deals that brokers can’t set up for you. There’s also the advantage that some of them are fee-free but you would be doing the work yourself to find these deals.
3. Are they qualified?
In the UK, mortgage brokers must be registered with the Financial Conduct Authority (FCA), in order to be authorised to give mortgage advice. This is required by law. When looking at any UK mortgage broker, check the FCA’s Financial Services Register for their name.