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What is a mortgage broker and do I need one?
Wondering what a mortgage broker actually does and whether you need one? This handy guide should help you to understand their role and find the right person for you.
A mortgage broker is an individual or company that will arrange your mortgage. Their job is to liaise between the borrower (no not a tiny Jim Broadbent, the person who is getting the mortgage) and the lender.
What is a mortgage lender?
A mortgage lender is a bank or building society that will lend money for buying a house. They set the terms and conditions of the mortgage, including the interest rate and rate of repayment. You can borrow money directly from the lender, but often people use a middle man: this is the mortgage broker. Why would you use a mortgage broker? Well, most people do. In fact one survey found that 90% of mortgages in the UK use an intermediary, which is a fancy word for mortgage broker. That’s because there are some major benefits — we’ll get to those in a minute.
What is a mortgage broker's job?
The short version? They’re there to make your life easier. That means taking care of all of those boring little details and the paperwork, so you don’t feel stressed — and it also means making sure you’ve actually found the best deal for you and making the most of your borrowing potential. The slightly longer version? A mortgage broker will help you to find and then apply for a mortgage. Rather than going straight to a lender, you talk to a broker who will look at your needs and your situation, then look at a lot of lenders to find the deal that’s the best fit.
Not sure if a mortgage broker is right for you? Well, they’ve seen it all. As we said, the vast majority of mortgages happen through a broker. Whether you’re a first time buyer, looking to remortgage your property, or wanting to move house and organise your mortgage, it’s their job to find the right mortgage deal and take care of the boring bits, so you don’t have to be overwhelmed by the process. And they help you from start to finish: They’ll help analyse your finances, going through your income, outgoings, and credit scores. They’ll also help with any advice to how to get you in the best place to be approved — little things like getting on the electoral register can actually improve your credit score. A mortgage broker will go through all of the available deals, answering any questions you might have. Do you want a locked in rate or variable? What repayments can you afford? What if you need to move your mortgage from another property? It’s their job to guide you through it all — and there are no stupid questions. They’ll take your documents and manage the application. That means you’ll have another set of eyes going over all of the paperwork and making sure everything is in order, so that stress doesn’t fall to you. (And you don’t forget to dot an “i” or cross a “t”.) Once you’re ready to move, a mortgage broker will guide you through the mortgage side of the purchase process. They’ll do the chasing, liaise with the lender, and be by your side right through until the keys are in your hands.
What types of mortgage brokers are there?
So, when deciding on a mortgage broker you can either go for a “whole of market” mortgage broker or a mortgage adviser with allegiances to a network of specific lenders, or even just one (“tied” or “multi-tied” brokers). A whole-market broker has access to much more of the mortgage market, and has no links to any specific lender. Either way, it’s their job to find you the best deal out there — and, importantly, take care of all of those little bumps along the way.
Is a mortgage broker right for me?
It’s your call. As we said, the vast majority of mortgages happen with a mortgage broker — it can make the process of buying a house run more smoothly or help you feel confident when you’re remortgaging. But ultimately, it’s about the right choice for you. There are a few things you can consider.
Pros: A broker has access to deals you might not be able to find just by searching around. It’s very convenient, meaning you don’t need to worry about finding your own lender. They have expertise that means you won’t feel alone when deciding on a mortgage deal. They’re in charge of the documents and paperwork, so you don’t have to worry about being rejected because you didn’t understand the jargon or missed a box that should have been ticked. They can help you with other things, like life insurance and income protection, which might give you peace of mind. Some brokers come without a fee, and only make money from the lender, so their services are free to you. Banks only offer mortgages from themselves, which might not be the best deal out there — or the right deal for you. Brokers give you access to a wider range. Cons: Selling a house is an expensive time and a mortgage broker could be one of those costs. The average cost of a broker is £500, and they tend to charge in one of the following ways: A fixed fee: set by the broker and agreed in writing before their services begin. On commission: this may be free to you, but they’re receiving commission from the lender. Though this may seem appealing, it may lead to their recommending certain lenders that they like working with. As a percentage: the broker will dictate their fee as a percentage of the mortgage you end up settling on. E.g. a 1% fee on a house of £300,000 would be £3,000.
How do I find a mortgage broker?
Trying to find a mortgage broker? There are a few ways to find a mortgage broker that’s a good fit for you. You could start with a simple google search, or ask friends who they used — a lot of mortgage brokers are found through word of mouth. Our trusted mortgage brokers and advisors can guide you through the process, and help you to find the mortgage that’s right for you. We like to make moving easy, so we’re here to help anyone looking to mortgage or remortgage (and you don’t even need to be buying or selling with Strike!). You can get started in just a few clicks — and with a free initial chat with one of our experts, we’re here to answer any questions you may have.
So, what's the conclusion?
So what does it all mean? Do you need a mortgage broker? Where can you find one?
It really is your choice. We do recommend getting a mortgage broker, whether you use us or not. Most people use them for a reason: you have someone to navigate deals to find the right fit, someone to take care of the paperwork, and, maybe most importantly, you get added peace of mind during the stressful process of getting a mortgage. We’re always looking for ways to take the stress out of moving — and this is one little change that can make a big difference.
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