- 28th April 2020
- Posted by: Mark
- Category: advice
While some people are happy to find a mortgage by themselves, a majority will use the services of a mortgage broker or adviser but what exactly does that mean,
Typically there are 2 types of mortgage brokers
- Independent mortgage broker
- Tied mortgage broker
An independent mortgage broker can offer a wide range of mortgage products from multiple lenders. Many will carry out what is term a “whole of market” search. This means they have database of hundreds of mortgage products. The easiest way to describe an independent mortgage broker is the fact they are not tied to one lenders mortgage products.
A tied mortgage broker means they will only offer mortgage products from one lender. While that one lender may have dozens of mortgage products, the broker won’t recommend mortgage products from another lender due to being tied to a particular lender. Some brokers may have agreements to a couple of lenders but they cannot offer the range of mortgage products a broker carrying out a whole of market search can.
Banks are tied mortgage brokers, they will not offer you products from a competing lender.
A mortgage broker will range from being self employed to companies employing hundreds of brokers to deal with their mortgage leads.
A mortgage broker is an adviser
If you need advice on mortgages, a mortgage broker is the person to speak to. A key part of a brokers job is to offer honest, impartial advice. Mortgage brokers have legal obligations and all fees must be clearly presented prior to entering any agreeement with them, where necessary this must be posted out. A mortgage broker must also complete a mortgage advice and practice course (CeMap) level three as approved by the FCA. This is an industry standard. In order to give advice a broker must get certain information from you in order to advise you of the best course of action regarding applying for a mortgage or recommending a particular type of mortgage.
Working out what you can afford
A mortgage broker is also someone who works out what you can afford in terms of repayments. Your income and outgoings are assessed by a broker. This helps the broker determine if you can afford a mortgage. This also determines how much a lender is likely to offer you. A mortgage broker is an intermediary between you and the lender. While the lender will want to see proof of income, the broker’s assessement is important as to whether you can afford a mortgage.
A mortgage broker is someone who can access mortgage products not publicly offered
Many lenders will only offer their products through a broker. They offer competitive rates like the high street lenders but work with brokers instead of dealing direct. Many specialist lenders only offer their mortgage products via a broker.
A mortgage broker helps when the high street banks won’t
If you have adverse credit for example you’ll be aware the high street banks are unlikely to offer you a mortgage. What a mortgage broker can do is find lenders who may be willing to help you. This is ideal for adverse credit and even the self employed who find banks are not always keen to offer then a mortgage.
A mortgage broker is there to help you. Yes in most cases a fee is payable, which is made known before you enagage in any agreement. However what a mortgage broker can do for you means they earn their fee by finding