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Mortgage Broker vs. Mortgage Advisor: What’s The Difference?
In short, the difference between a mortgage broker and a mortgage advisor is:
- A mortgage broker acts as the middleman between borrowers and many different lenders in the UK market.
- A mortgage advisor is tied down to one loan company.
We’ll go into more detail about the difference between these two next.
What Is A Mortgage Broker?
Think of a mortgage broker as your mortgage guide. They aren’t tied down to one independent firm. Instead, they serve as an intermediary between borrowers (i.e. you) and lenders (i.e. banks) in the mortgage process. Much like the “middleman”, a mortgage broker gives you access to various mortgage products or options on the current UK mortgage market.
- A mortgage broker will explore various mortgage options to help borrowers find the best-suited deal on the market.
- They assist in completing and submitting the application process on your behalf and ensuring that it is accurate and complete. This results in a successful mortgage application.
- A mortgage broker will negotiate loan terms (from the respective bank or mortgage lender), interest rates, and conditions based on the borrower’s loan amount etc.
- These brokers provide the best mortgage strategy for different mortgage types. This ensures the borrower fully understands the terms and is able to manage the loan instalments effectively.
Why use a mortgage broker?
Pros
- Tailored solutions: They can help source mortgages that are aligned with the borrowers’ financial situation and property goals. A mortgage broker is helpful to use if you are a first-time buyer.
- Unbias: A mortgage broker gives independent advice. They are not tied down to a specific lender. They act solely in the best interests of the borrower.
- Saves time: Using a mortgage broker will save you time, especially when trying to navigate the intricacies of multiple loan options.
- Access to numerous lenders: Mortgage brokers have access to a wide mortgage product range and lenders. This includes some that may not be available to the public, such as ‘special’ mortgage deals or direct deals.
- Understanding: Using a mortgage broker will ensure you fully understand the lending process from a specific lender or specific lenders, such as loan terms, interest rates, etc.
- Regulated services: They ensure that the mortgage process adheres to all the relevant regulations. Mortgage brokers are regulated and authorised by the Financial Conduct Authority (FCA) to ensure consumer protection and ethical practices.
Cons
- Mortgage broker fees are usually services that are charged for.
- Some mortgage brokers, especially from smaller firms, may have limited access to certain lenders or all available mortgage deals on the UK market.
- Quality and expert knowledge can vary between different mortgage brokers.
How much do mortgage brokers cost?
For most mortgage brokers, there may be fees to incur, which can vary.
These can be charged as:
- Flat rates
- An hourly rate
- Commission-based
- A percentage of the loan amount
What Is A Mortgage Advisor?
A mortgage advisor, or independent mortgage advisor, is someone who works for one independent mortgage company or firm.
They provide mortgage advice about all the different mortgage options from their firm (such as Barclays Bank, for example). Essentially, they are “mortgage specialists” for only one company and usually will not give mortgage advice about other – sometimes cheaper – deals elsewhere.
A mortgage advisor will help borrowers choose the best deal from their lender, helping them understand the terms, conditions, and repayment fees. They also assist with the whole mortgage application process on the applicant’s behalf.
Why use a mortgage advisor?
Pros
- Expert knowledge: Mortgage advisors have detailed knowledge about their affiliated lender’s mortgage products and options. Some may even be specialists in one type of mortgage deal.
- Support: A mortgage advisor offers ongoing advice and support throughout the entire mortgage application process.
- Tailored solution: A mortgage financial advisor assesses the borrower’s financial situation and recommends suitable deal/s that align with their current finances.
Cons
- Limited options: Specialist mortgage advice is only limited to products from the lender they work for.
- Bias: Recommendations can potentially be “bad advice” or biased, as deals lean more towards their affiliated loan company’s products – even if a more suitable deal is available elsewhere.
- Availability: Depending on the demand, trying to set a meeting with a specialist mortgage advisor can take time; potentially weeks.
How much do mortgage advisors cost?
Some mortgage advisors may charge a set fee for their expert advice and services. However, others may not charge fees, as they are compensated through commissions.
What Is Considered Good Mortgage Advice?
Whether you opt for an advisor or a broker, keeping these 10 key questions in mind can be helpful.
- Do they understand my current financial situation and mortgage budget?
- Do they align the “best” mortgage deals with my needs and finances?
- Have they explained all the terms, conditions, and mortgage interest rates clearly?
- What are my monthly loan repayments? And for how long will I be paying this?
- Have they explained the long-term financial impact, including adjusted future interest rates?
- Have all the mortgage broker fees, costs, and potential future charges been clearly and transparently explained?
- Have they (the brokers) given me a variety of loan options from various lenders in the UK market?
- Have they provided a comprehensive analysis of the best deals that explain the pros and cons?
- Does this mortgage advisor (or broker) adhere to regulations set by the FCA?
- Are they able to provide ongoing support and assistance during the entire application process, from start to finish? Have they included educational resources, or the like, to help me make a more informed decision?
Equipping yourself with these key questions will ensure you have covered all your mortgage bases. It’s advised that you also do your own research, coupled with all the advice from your chosen broker or advisor, to make a more informed decision.
FAQs
How do I know that a mortgage broker or mortgage advisor is legitimate and regulated?
You can verify their registration and credentials with the Financial Conduct Authority (FCA). Look at past client testimonials and reviews to gain additional insights into their credibility and services.
Which bank mortgage advisor is best to go with for a first-time buyer?
Many UK banks have an independent mortgage advisor who can assist with individual circumstances for first-time buyers. HSBC, Barclays Bank, Lloyds Bank, and NatWest Bank are just a few that offer mortgages.
When would I need a mortgage advisor or mortgage broker?
There is never any harm in seeking mortgage advice, whether you’re a first-time buyer or need to lend more when buying a bigger property. Mortgage advisors (or brokers) are usually best to use when purchasing your first property.
This is because the application process can be complex and having the wrong information can result in an unsuccessful mortgage application.
What is a lifetime mortgage provider?
A lifetime mortgage involves having a lump sum of money taken from the equity of your home, usually between £10,000 and £100,000. How it works is the loan (and any interest) is repaid when your home is sold, resulting in no monthly instalments.
Also see: How Mortgage Brokers Can Rip You Off
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