What does a mortgage broker do?
Mortgage brokers act as the middle men between you and the mortgage lending company, in much the same way as an insurance broker and with similar specialist market knowledge. A mortgage broker’s job is to find you the best possible deal for your personal circumstances, searching the market to uncover all your choices.
Despite the credit crunch there is still an enormous variety of deals, incentives, interest rates and payment terms out there. And finding the right deal can save you a small fortune.
UK mortgage brokers are regulated by the Financial Services Authority, so there are plenty of consumer safeguards in place. Visit the FSA website for details: fsa.gov.uk
Mortgage brokers don’t lend their own money to consumers. They negotiate loans with mortgage companies who lend the money.
Four kinds of mortgage broker
• Tied mortgage brokers can only offer the products sold by one company. Although they have access to a very limited range of products, their deals can sometimes be very good. Brokers like this charge a percentage commission on the mortgage rather than taking a fee up front
• Multi-tied brokers, mostly banks and building societies, have access to several lenders’ products. But the product range is still limited. Like tied brokers, multi-tied mortgage brokers usually charge a percentage commission on the mortgage rather than a fixed fee up front
• Panel brokers are authorised to recommend products from a panel made up of a handful of specially chosen mortgage lenders. They usually charge a fee up front
• Independent mortgage brokers cover the whole market. They are free to offer any product available, through any mortgage lender. Because of this, they’re the most likely to be impartial. Whole of market brokers like this will charge a set fee up front rather than take a percentage commission
Mortgage broker fees vary. So once you’ve decided which kind of broker suits you best, contact your shortlist and find the one with the lowest fees or commission levels.
When is the best time to contact a mortgage broker?
People do things differently. Some prefer to get the amount they can borrow settled before they begin house hunting, so that they can move fast once they find their dream home. Others prefer to wait until they’ve found somewhere to buy before approaching a broker.