What is a mortgage broker?
A mortgage broker is a professional mortgage advisor who will arrange your mortgage for you. They’ll assess your information – including your annual income, employment status and anything else that's relevant – and advise you on the best mortgage for you. If you’re happy with what they suggest, they’ll even manage the mortgage application on your behalf.
Here we’ll look at the advantages and disadvantages of using a mortgage broker, while looking at which type of buyer would especially benefit from recruiting their services.
So, whether you’re a first time buyer or you’ve been buying and selling property for years, you may find that a mortgage broker might be able to take some of the pressure off.
Pros of using a mortgage broker
You can access exclusive mortgages which aren’t otherwise available
Mortgage brokers have great relationships with lenders. They arrange mortgages everyday and, as a result, some mortgage lenders reward them by creating exclusive mortgages just for them. This could include a better interest rate or a more favourable mortgage term.
Their services are normally free – until your mortgage is agreed
Most mortgage brokers won’t charge a fee until your mortgage agreement is all done and dusted. So, effectively, you won’t to pay anything until your mortgage term begins. This is especially important if you’ve any doubts about whether you’ll be offered a mortgage in the first place – if you’ve recently moved jobs or have a poor credit rating. You won’t have to pay a thing unless your broker manages to successfully secure you a mortgage agreement.
It’ll probably save you time
Applying for a mortgage can take time. Even if you’ve done your homework – using mortgage calculators and mortgage comparison websites – and have found exactly the right right mortgage for you, you’ll still need to lock it down.
It’s no secret that applying for a mortgage requires a lot of documentation – current bank statements, pay slips, accounts or self-assessment SA302 year-end tax calculations… the list goes on. And when it comes to buying property, time is of the essence.
If your dream home has multiple offers on it, you’ll need to act fast. In almost all cases, a seller will want to see your mortgage agreement in principal before they formally accept your offer and take their home off the market. A mortgage broker can help to speed things up. In fact, our in-house mortgage brokers have even been known to turn around an agreement in just one day. So, if you need a quick decision, go with a broker.
Cons of using a mortgage broker
A mortgage broker will charge a fee
When you add up all of the hours that a qualified mortgage advisor puts into your application, it’s only fair that this service should come with a fee. However, this is usually negligible – especially when you weigh it up against the money you could save with the favourable mortgage rate that they’ll find for you.
When should you use a mortgage broker?
Anyone can use a mortgage broker – and for the reasons already mentioned, it’s a good idea to give one a call, simply for some free mortgage advice.
However, there are some mortgages which are more complicated to arrange than others, which is why it’s probably best to leave these to the experts. This could include:
Freelancer or Self-employed mortgage
Whether you’re a sole trader, a contractor, a partner or company director, your mortgage application process will rely on slightly different documentation than conventional mortgages. A mortgage broker can help you through the process, breaking down exactly what’s needed to accompany your mortgage application.
Non-traditional structure mortgages
If the home that you want to buy is unusual in any way – for instance, if it has a timber frame or is a listed property – you may need to apply for a particular type of mortgage which covers this. Non-traditional structured properties aren’t an easy sell and if your home should ever be repossessed, your mortgage lender may have trouble finding a buyer for it – so most won’t be willing to take the risk.
The good news is that mortgages do exist for these non-traditional structures. A mortgage broker will be well-versed in the specifics, connecting you with the lenders which offer the best rates and repayment options for you.
If you’re planning on renting out your property as soon as you complete, you’ll need to apply for a buy to let mortgage. Similarly, if you want to convert your current residence into a rental home, you’ll need to exchange your current mortgage with a buy to let mortgage. In any case, a mortgage broker will be able to advise and assist where needed.
Whether it’s for debt consolidation or to free up some cash to make those much-needed home improvements, remortgaging could provide a great solution – and even end up saving you money. A mortgage broker can help to demystify the process for you, guiding you through your options so you can make an informed decision about your next steps.
First time buyer mortgages
Okay, so first time buyer mortgages should be fairly straight-forward to arrange – unless you also fall into one of the categories already mentioned. However, if you’re a first time buyer, chances are you’re completely new to the mortgage application process. A mortgage broker can simplify this for you, talking you through your options and breaking down everything that’s needed – so you can get on with taking your first step onto the property ladder.