Mortgage Company or Mortgage Broker?

By December 11, 2008Mortgage Brokers

What’s the difference between a mortgage company and a mortgage broker?

Mortgage companies lend money direct to borrowers. Unlike mortgage brokers, who arrange mortgages for householders from mortgage companies.

Most UK mortgage companies are banks and building societies. These businesses borrow money from each other, internationally, to lend to customers who want mortgages.

The worldwide credit squeeze has made banks and other financial institutions cautious about lending money to each other, in case they lose money through another sub-prime mortgage collapse. And they’re charging higher interest rates for the small amounts of inter-bank lending they’re prepared to do.

As a result, mortgages are in short supply and mortgage companies are less willing to lend.

Should I go direct to a mortgage lender?

Mortgages are scarce and many lenders have stopped giving mortgages to new customers. So going direct to mortgage companies might be hard work. In today’s economic climate you will probably have to contact several mortgage lenders before you find one prepared to offer you a deal.

Your own bank or building society is much more likely, these days, to offer you a mortgage than a financial institution that you don’t have any relationship with.

It might be wiser and will save you a  great deal of time and hassle to find yourself a reputable independent mortgage broker (link to Mortgage Broker page) who will search the entire mortgage company market to find the right deal for your circumstances

Advice about mortgage lenders

All reputable UK mortgage lenders are registered with the Financial Services Authority (FSA), which has strict rules and regulations and makes sure your consumer rights are protected. Never take out a mortgage loan with a UK mortgage provider that isn’t FSA regulated.

Find out more at:

For government advice including mortgage comparison tables updated daily: moneymadeclear.fsa.gov.uk

The Financial Services Authority: fsa.gov.uk

Top UK mortgage companies:
Here’s a list of the top ten UK mortgage lenders, from mortgageguide.co.uk June 2008:

•    The Halifax Building Society: Halifax.co.uk

•    Nationwide: nationwide.co.uk

•    Woolwich Building Society: woolwich.co.uk

•    Bradford and Bingley: bradford-bingley.co.uk

•    Abbey National: abbey.com

•    HSBC: hsbc.co.uk

•    Royal Bank of Scotland: rbs.co.uk

•    Lloyds TSB (including mortgages from partner mortgage company Cheltenham & Gloucester): lloydstsb.com

•    Alliance & Leicester: alliance-leicester.co.uk

•    Yorkshire Building Society: ybs.co.uk

•    Compare mortgage companies: MoneySupermarket.com

Please share your experiences about mortgage companies.