Are Mortgage Brokers Worth It?

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If you’re thinking about buying a property, you’re at the start of what could be an exciting time. Owning your home is a major achievement for many people. However, the world of mortgages can be a minefield, full of complex information and statistics. If you’re unfamiliar with how home loans work, it makes it far more challenging to find the right one for your needs. Hence why lots of people consider whether to seek professional advice. This article discusses the ins and outs of mortgage brokers. Is mortgage advice free? Is it beneficial to go through a broker rather than approaching a lender direct? Are there situations where you might find a loan via a broker than you wouldn’t find yourself? Read on to find out more. Many people ask the question, ‘are mortgage brokers free?’ It’s a reasonable question. You should always understand whether services are provided free upfront, whether there are charges involved, and whether those charges are added to the amount you owe on your home loan. In the case of a broker, there are charges involved. However, these charges may be applied in one of two ways: This will either be you or the lender, or both as explained above. Your chosen broker will give you something called a Key Facts document. This will contain information about their fees and how they earn them. This should reveal whether you will need to pay a fee for their service or whether the lender will pay them commission if you go ahead with a loan. More information about their fees will be provided in the Key Facts Illustration. This is another document giving information about the mortgage the broker has found for you. Are mortgage brokers regulated? The short answer is yes. They must be regulated by law to be able to provide the services they offer. Don’t be afraid to check someone is regulated before using their service. All UK brokers should be regulated by the Financial Conduct Authority. The only exception is if the broker is working as an agent, in which case the company they are working for must be regulated. You can check the FCA register to confirm this. Regulation also means you’re covered if you run into any issues or wish to make a complaint. All brokers must provide a service that adheres to the regulations they work under. Your chosen broker should also be fully qualified. Not just any qualification either, but one that is recognised by the Financial Conduct Authority. Look for either CeMAP or Cert MA when looking through a broker’s qualifications. Again, confirm the information you have found to make sure they aren’t just laying claim to something they do not have. Rogues are rare, but they do occasionally come to light.  It’s worth remembering they are experts in the marketplace. People looking to get a loan to help them buy their own home are unlikely to know all the providers out there today. The big-name banks and building societies will be familiar to you, no doubt, but how many smaller providers could you name? Their experience within the market means a broker can identify what you want from your loan and which provider would be the best match for you. Typically speaking, a good broker will be worth more to you in value than you’d pay for their services. It could even make the difference between finding a suitable mortgage or being rejected if you apply to an unsuitable lender. To give you a simple example, you may find 20 possible deals under your own steam. A broker might be able to find several times that amount. If you didn’t consider asking for advice, you would never know whether your ideal loan could have been far better than the one you found on your own. It’s not just a case of having access to more options though. It’s also a question of the potential savings you could make. It’s understandable to think only of the fees you will pay for using their service. However, if they found you a deal with a lower interest rate than anything you could find, you will likely save far more than you would pay in fees. That’s why looking at all the options is always advisable when you’re searching for the most important loan you will ever get. If you use a mortgage broker who offers no upfront fees and no obligation quotes, then what have you got to lose in using a broker? (Yes, at the Mortgage Broker Ltd we offer this exact service :D) If you have decided an adviser is the best route forward, the next step is to choose someone to help you. There are lots of brokers out there, so it is important to find someone who is a good fit for you. We’ve highlighted various aspects here, so you can approach the decision with greater knowledge. If your situation is less than traditional, you may benefit from the expertise and knowledge a broker can bring to the table. For example, if you are self-employed you’ll find some lenders won’t consider you for a mortgage. Others specialise in people who are self-employed. Brokers are more likely to know the best sources to go to, including ones you may never have heard of. It can also save you a lot of time, hassle, and money. Yes, you may need to pay a fee to use their service (although the commission alternative wouldn’t involve any extra fees for you), but it could be well spent if you find a better deal. It is very easy to get overwhelmed looking through all the possibilities on the market today. If you want the best picture, using a broker may well be the best option to take.