How to choose a mortgage broker
Aside from deciding on your dream house, choosing your mortgage broker is also one of the most important decisions you’ll make in this process. Your home is one of the largest purchases you’re going to make in your life, and the mortgage lender will basically determine everything, from your fees to the interest rate. it is important to get proper mortgage guidance.
Loan Corp understands that getting a competent mortgage broker is crucial in paving a good path in your mortgage. Let’s look at how to choose a mortgage broker.
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Where do I find mortgage advisers?
There are various ways you can find mortgage brokers.
Online reviews and websites
You can look up a mortgage broker through websites or search for them in your area. Check reviews on Google and other platforms, so you have an idea of their services and other people’s experiences.
Look for comments such as:
- Mortgage success
- How fast do they reply to queries
- Customer service
- Closing times
These comments will give you an idea of how communicative the mortgage broker is.
Referrals from a real estate agent
Your real estate agent may know many mortgage brokers. They know the type of mortgage you’re looking for, so they can point you to mortgage brokers who have experience working with buyers like you.
Real estate agents may have a long-standing relationship with mortgage brokers and will be able to make a recommendation based on professional interactions. While real estate agents and brokers are different, real estate agents tend to gain if they get you the best broker.
References from friends and family
Ask close friends and family if they have used a mortgage broker before and whether they would recommend them. People you’re close to will give their honest feedback about whether they liked the broker and their services.
Your family and friends may also give details about their personality or professionalism, two factors that are somewhat hard to find in reviews but heavily influences your decision.
Another question you should ask is if they felt the mortgage broker put their needs first and if your family member or friend felt like they were pushed towards a specific lender, which is a red flag!
You are the mortgagor, and you should feel confident in the choices your mortgage adviser makes for you rather than them working for their own interest.
How to choose the best mortgage broker
The mortgage market is full of brokers and lenders, which can be overwhelming for you to choose from. However, using a mortgage broker can help you navigate this market better.
Here are some easy tips to get the best mortgage broker.
Whole-of-market broker
Having a whole-of-market broker allows you to get a wider range of products and is representative of the mortgage market. Being able to access all types of mortgages lets you choose one that’s perfect for you.
Research first
You should be prepared when you start looking for a mortgage broker. Look for the types of mortgage deals online and see which type you would prefer. This way, you would be able to assess the advice given by the broker.
Get in contact with several mortgage brokers to compare what they can offer. However, remember that the broker is not obliged to give you the best or high-quality loan. They are only legally required to provide a loan suitable for you. Be prepared to dissect their recommendations.
While broker-only deals are beneficial, not all brokers can find a lender with a lower interest rate. If you get a better mortgage deal from the lender, then you should consider that.
Check experience and educational qualifications
Make sure the broker you choose has the necessary qualifications and licenses to provide you with a loan. They should have an FCA qualification such as Cert Ma (Chartered Insurance Institute Certificate in Mortgage Advice) or CeMAP (IFS School of Finance Certificate in Mortgage Advice and Practice).
Ask your mortgage broker what experience and qualifications they have. This will determine how far their help can go. The ultimate key to choosing a mortgage broker lies in shopping around.
While there are brokers out there without proper qualifications and impeccable customer service, these individuals do not know the legalities of the mortgage market.
Ask how the mortgage broker gets paid
Most mortgage brokers get paid a commission directly from the bank for arranging their loans. This means that they may affect their ability to give you the best, unbiased advice. Mortgage broker fees may be private (and costly!), while some get two types of commission:
- Upfront commission- This is a percentage of the total value of the mortgage loan, so the larger the loan, the larger the commission to the broker. So, you have to be wary of a mortgage broker who’s pushing you into a higher-priced loan than you originally wanted.
- Trail commission- This is a percentage of the mortgage loan that brokers will receive over the timeframe of the loan. It also means that the broker has no obligation to provide any service to you during the duration of the mortgage deal. In essence, they’re getting paid for doing the bare minimum.
Note that a mortgage broker always has to inform you about what type of payment they get.
Ask them how many lenders they deal with
Mortgage advisers usually deal with a board of lenders, most of which offer different mortgage deals and products. There is no regulation about how big this panel should be, but usually, a broker who works with an extensive panel will have a lot of options to choose from.
Even if they have a large panel, the broker may still have their favourites, so you should ask them where they usually like to send their trade and how many of their clients go to that specific lender.
Ownership structure
Brokers have to act in your best interests when it comes to a mortgage deal; however, you have to ask about their ownership, as it may affect the guidance they give you.
For example, if the lender has an ownership share in the broker, then that broker may convince you to go with that lender, which may not be good for you, especially if they are pricey. It’s best to get a mortgage broker that is independent.
Your broker has to provide you with certain documents
Credit Guide
The broker is legally required to give you a credit guide document, so make sure they do. It has the broker’s details and a detailed record of the commission the broker will receive if you go ahead with the mortgage.
The credit guide also has important contact details if you have any concerns or complaints with the broker. If you have any complaints, you can also contact the Financial Ombudsman Service.
It is vital for you to keep these documents safe and read them carefully to ensure that the broker has got the correct information about your financial position and objectives.
Credit assessment
The broker is also legally obliged to follow proper lending laws and shouldn’t lead you into a risky or inappropriate loan. They must properly assess your expenses and income, with your financial objections and expectations. All of this is in a document called a credit assessment. Make sure to ask your broker for a copy.
It’s best to double-check the document to see if what you told your mortgage advisor matches up with the written assessment. The authorities have caught out many brokers that lie on these credit documents to make people go into loans they cannot afford.
Questions to ask your broker
Here are ten questions to ask your broker when looking for a mortgage:
- Firstly, are you a qualified mortgage broker authorised to negotiate and get deals between lenders and buyers?
- Which type of loan is best for me?
- What are the interest rate and the annual percentage rate?
- Are there any discounts?
- What are the down payments?
- What are all costs involved in the mortgage deal?
- Can you get a loan rate lock?
- Can the lender approve loans in-house?
- How long will the application take?
- What is the process for someone who has bad credit?
Should I trust online mortgage advisors?
Online brokers are now so advanced that there are online services that help you find a good deal from a mortgage lender without even interacting with a person. All you have to do is fill in an online form or send some details through an application.
This is a lot quicker than tirelessly going through an extensive list of brokers. You can find and apply for a mortgage in about 15 minutes, which is usually free. However, some ask if this option is safe. This depends on your priorities.
While this option gives you the freedom to find a loan deal at any time of the day, which is good for people who have their plates full, speaking to a real broker is reassuring, especially if your financial situation is complicated. Certain things cannot be disclosed online and need to be dealt with face-to-face!
FAQs
How do I know if a mortgage advisor is legitimate?
In the UK, the broker must be authorised by the FCA. You can look at the Financial Services Register for individuals or firms and the activities for which companies have permissions.
Make sure that you check the firm or broker before dealing with them.
Should you phone a lot of brokers?
Yes. You are advised to ‘shop around’ for brokers and should ask each one how much fees they charge, which is usually 1% to 2% of the mortgage amount.
On top of that, home prices, competitiveness, and other trends in the market will have an impact on what the brokers charge you.
Should I find a mortgage adviser?
Yes. A specialist broker will be able to take you through the whole process, which is useful if you are a first-time home buyer. They will also look in the market to find the best mortgage deal for you, as well as have access to limited deals, which are not available to all buyers.
Takeaway
At the end of the day, you have to feel comfortable with the broker you choose, and you need to be able to trust them. If you feel like the broker does not explain things properly to you, or does not respond to you fast enough, you should consider hiring another mortgage broker.
Finding a good adviser is important so contact us now, as you can lose out on a good property if the broker is too slow in the mortgage application process.