Topics
Key Takeaways
- Mortgage brokers and advisors both give mortgage advice.
- Mortgage brokers focus on sourcing the best mortgage deals from a variety of mortgage lenders across the UK market.
- Mortgage advisors work for one mortgage lender. They source the best mortgage deal from a single lender.
- Mortgage brokers act solely in the best interest of the borrower.
- Mortgage advisors may present biased options, as sales targets need to be reached.
Mortgage Brokers: All You Need To Know
- Role: Intermediary or “the middleman”
- How much does a mortgage broker cost? ±£500 (but can vary)
A mortgage broker is not tied down to one independent mortgage lender or firm. They serve as an intermediary or “the middleman” between borrowers (i.e. you) and a variety of lenders (i.e. bank or building society). They have access to a wide range of mortgage deals across the UK market and source the best deal for the borrower.
Key Responsibilities
- Mortgage brokers source the best mortgage deal that aligns with the borrower’s budget and preferences. Ensuring deals are sourced from numerous mortgage lenders across the UK property market.
- A mortgage broker gives independent and unbiased mortgage advice. They can be helpful to use if you are a first-time buyer.
- A mortgage broker can help with completing and submitting your mortgage application. This ensures that it is accurate from the get-go.
- A mortgage broker will negotiate mortgage loan terms, interest rates, and conditions on the borrowers’ behalf.
- Brokers explain the complexities of the UK property market and assist in the home-buying process. Such as monthly instalments, types of loans available, fee structure, and loan terms.
Benefits
- Convenience: Brokers simplify the mortgage process, especially for those unfamiliar with the finance and mortgage market.
- Access: Brokers have access to a wide range of lenders and their mortgage products.
- Expertise: They provide clarity and understanding in the fluctuating mortgage industry.
- Unbiased options: They give independent advice that is not subjected or affiliated to any one lender. They act solely in the best interest of the borrower.
- Time-saving: A mortgage broker saves you time when navigating multiple mortgage loan options.
- Regulated service: Brokers ensure that the mortgage process adheres to all industry-related standards. They are regulated and authorised by the Financial Conduct Authority (FCA). This ensures consumer protection and ethical practices are adhered to.
Drawbacks
- Mortgage broker fees: Brokers might charge a fee, which will either come out of our own pocket or the lender’s. This can be expensive if you haven’t budgeted correctly. A mortgage broker cost is usually around £500 but can vary. This can be a fixed rate, hourly rate, commission, or a percentage of the mortgage.
- Limitations: Not all brokers have access to the entire mortgage market, resulting in potentially limiting options for the borrower.
- Quality: The qualifications and experience of brokers can vary significantly. Ensure you check their credentials on the FCA website.
Top tip: Use a mortgage calculator to estimate the amount of money you are eligible for from a mortgage.
Mortgage Advisors: All You Need To Know
- Role: A mortgage consultant
- How much does a mortgage advisor cost? Varies
Mortgage advisors, or independent mortgage advisors, work for one independent mortgage company, firm, or financial institution (such as Llyod’s Bank, for example).
In essence, they provide expert mortgage advice about mortgages from a single lender. They assist in choosing the best deal from this selection for borrowers.
Key Responsibilities
- A mortgage advisor assists with choosing the best mortgage deal from their lender’s selection of mortgage products. Much like a mortgage consultant.
- A mortgage advisor offers ongoing support and information during your home-buying process. They aid in dealing with mortgage lenders, estate agents, and valuators.
- They assist with completing and submitting your entire mortgage application.
- They have access to review the borrower’s bank statements, offering advice on the best deal suited to the borrower’s budget.
- Advisors provide a helping hand in navigating the complexities of multiple mortgage options, market interest rates, etc.
Benefits
- Expertise: Advisors have detailed knowledge and are up-to-date with the latest mortgage deals from their affiliated lenders.
- Access: They have access to ‘special’ or exclusive deals that may not be accessible to others in the mortgage industry.
- Support: They provide guidance and ongoing support throughout the home-buying process, explaining the loan term, interest rate and financial situation to borrowers.
- Time-saving: Advisors help borrowers complete and submit their application, ensuring it is correct from the get-go. They also assist with expediting the Agreement In Principle letter from their lender on your behalf.
- Discounts: Certain lenders (e.g. banks) may offer discounted deals or specials to borrowers who already bank with them.
- Regulated service: Advisors are regulated and authorised by the FCA. This ensures that consumer protection, confidentiality, and ethical practices are adhered to.
Drawbacks
- Limitations: These kinds of market brokers only have access to mortgage offers from a single lender.
- Bias: Deals lean towards an advisor’s affiliated lender, even if a more suitable option is available elsewhere.
- Targets: Most advisors have sales targets to reach each month. This could potentially ‘rush’ or ‘pressurise’ borrowers into any mortgage deal – which may not be the right mortgage – just to reach these targets.
- Costs: Advisors usually work on a commission structure. They are not limited to charging fixed rates, hourly rates, or taking a percentage of the total mortgage deal.
- Availability: Arranging initial consultations, during standard office hours and around clients’ schedules, can take some time – possibly even weeks.
FAQs
Can I apply for a mortgage in the UK if I am self-employed?
Yes. You will need to give detailed evidence to support your mortgage application process. Such as 3 years of tax returns, bank statements, and confirmed business registration (i.e. Companies House) to name a few.
Which specific lenders offer mortgages for first-time buyers?
Most UK banks, such as Barclays, Lloyds, Natwest, and HSBC, offer mortgages for first-time buyers. They have dedicated mortgage advisors or consultants to assist with this.
Also see: How Mortgage Brokers Can Rip You Off
Find a a mortgage brokers in the following cities: