Whether you’re considering applying for your first ever mortgage, or your 5th, it’s always important to get as much advice as possible before making any obvious strides forward.
This often comes in the form of a friend of family member who has gone through the process recently themselves.
Something you might have had suggested to you is a mortgage broker, a professional that helps you through the process.
But what exactly is a broker? What do they actually do? How much do they cost? Are they really worth it?
To answer all these questions, here’s everything you need to know about a mortgage broker.
Definition
A mortgage broker is a financial expert who specialises in the mortgage market. Using their knowledge and set of skills, they help you through every step of the buying process, from the initial search for a deal to the completing of the application.
Ever Growing Market
The current UK housing market seems to be ever expanding. Because of this, it can be difficult for buyers to get to grips with good and bad deals. This is where brokers can first help.
They know the market better than anyone and with a few facts about the buyer in hand, they can quickly filter the good from the bad to present a buyer with the few deals which would really suit them.
Complex Application Processes
In the last couple of years, both the use of brokers and the number of dealers completed with the inclusion of a broker have increased.
The catalyst for this increase in broker involvement was the Financial Conduct Authority’s (FCA) Mortgage Market Review (MMR). Once it was published in 2014, lenders have had to ask much more detailed questions of potential lenders int eh application process.
Since these changes, a number of applicants which might well have been accepted for a mortgage in the past, are now being rejected.
Difficult Scenarios
There are certain personal circumstances which by no necessary fault of your own, may halt your progress in any mortgage application.
We spoke to mortgage brokers Search Mortgage Solutions who explained “things like being self-employed instead of having a more traditional employer can really put lenders off.”
“If you have a situation similar to this, then the best thing you can do is have a broker to guide you away from the lenders who they know won’t be interested, and help you in the direction of those who might.”
Lender Links
A huge plus with some brokers is that they can source their borrowers special deals from certain lenders which otherwise might not exist on the market.
However this can be a bit of a poison chalice because some of the brokers with lender links might try and push you towards certain deals in order for them to get certain bonus fees from the lender, so it’s important to consider the broker and his/her intentions before you commit to anything.
Payment
There are a number of ways in which brokers are funded. Some will operate without charging the borrower anything at all, but instead charge the lender commission for bringing them the business.
Others charge borrowers a fee. This can either be a flat fee for their services or a percentage of the fee of the loan being applied for.