The definitive guide to choosing a mortgage broker

What’s included?

8. When should you speak to a mortgage broker?

9. What will you need before speaking to a broker?

10. What mortgage types can a broker assist with?

11. Mortgage industry jargon explained

12. How to check a mortgage brokers FCA number

13. I’m ready to speak to a broker, now what?

14. Get matched with a mortgage broker

Introduction

When purchasing a home (whether it’s your first or tenth), it’s important to properly research all options and plan things as best as you can. There are so many things to consider from mortgage rates to moving dates, and everything in between. One piece of advice that we hear time and time again is that it’s never too early to begin planning.

For this reason, when it comes to the actual purchase of a home, we recommend speaking to a mortgage broker as soon as possible, to enable you to plan as far in advance as you can.

But choosing a mortgage adviser can be a daunting task. 

A quick search for ‘mortgage broker in [my town]’ throws up hundreds of options, so how do you know which one is best for you? Is there even a difference between mortgage brokers?

The aim of this article is to demystify the role of a mortgage broker and give you a clear understanding of exactly what a mortgage broker does and how to choose the best one for you. Alternatively, if you’re looking to speak to a mortgage broker now, click here and find an Advizure recommended broker (we’ve done the time-consuming research for you already).

Why choose a mortgage broker vs going directly to your bank?

The answer to this one is quite simple. Choice.

When using a mortgage broker you will have access to thousands of mortgage deals from hundreds of finance providers. If you use your bank directly, how will you know if there’s a better deal on the market for you? 

Also, a professional mortgage broker will be processing mortgages for clients day-in, day-out – it’s what they specialise in and how they earn a living, so it’s often a good idea to leave it to a pro!

The benefits of using a mortgage broker

• Save time – using a professional broker to manage the whole process will save you time and effort. They will know before you even begin the mortgage application, whether you’re likely to be accepted and where they should begin looking for the best deals.
• Save money –  a mortgage broker is likely to get you a better deal than going directly to a bank. This is because they’ve got access to thousands of potential deals vs a select range of deals from a bank or single lender.
• For a unique situation –

Mortgage broker fun facts:

• There are NUMBER mortgage brokers in the UK
• The outstanding value of all residential mortgage loans was £1,541.4 billion at the end of 2020 Q4, 2.9% higher than a year earlier (https://www.fca.org.uk/data/mortgage-lending-statistics)
• All mortgage brokers need to be registered with the Financial Conduct Authority and will be able to provide their FCA number
• The mortgage broker qualifications are called the CeMAP (Certificate in Mortgage Advice and Practice)
• Most mortgage brokers are self employed themselves, so they’d be likely to benefit from using a mortgage broker vs going to a bank directly

How much do mortgage brokers charge?

Mortgage broker fees range from completely free up to £800 to process your mortgage application. Before choosing which broker to use, we recommend checking out their online reviews. Their level of experience and reviews/online ratings often determine how much a broker will charge and often – you’ll get what you pay for. 

Mortgage brokers are legally obliged to disclose all fees at the start of the process including any commissions they receive from the lenders. They’re also legally obliged (and are regularly checked upon) to provide the best deal for you. Not the deal that gets them the most commission.

When should you speak to a mortgage broker?

It’s never too early to speak to a mortgage adviser. 

Whilst they can help with your actual mortgage application, they can also assist you with advice on getting ready for your mortgage application. Sometimes, first time buyers just don’t have a large enough deposit, so a broker will be able to advise on the deposit size they’ll need. Or maybe, you’re looking to remortgage but your credit rating needs a bit of work, so a mortgage adviser can advise on what needs to be done.

Do I need to have a large deposit before speaking to a mortgage broker?

For first time buyers, saving up for a deposit is often the toughest part of getting a mortgage. It can take years of discipline and self-control, which all pays off when you get your dream first home. Recently, 5% mortgages (meaning you’d only need 5% of the property value as a deposit) have been reintroduced. However, it’s worth considering that the higher the deposit, the lower the amount that you’ll borrow, meaning the less you’ll pay overall.

Overall, it’s worth speaking to a mortgage broker as soon as possible as they’ll be able to advise on the size of mortgage that you’ll need.

What mortgage types can your mortgage broker assist with?

A whole-of-market mortgage broker can assist with all mortgage types including:

• First time buyer mortgages
• Help to buy mortgages
• Remortgages
• Second charge mortgages
• Shared ownership 
• Bad credit (often called adverse credit) mortgages
• Buy to let mortgages

Mortgage industry jargon explained

Agreement in Principle – often abbreviated to an AIP, an agreement in principle is a legal document from a lender stating that they will lend you a certain amount of money to purchase a home. This is used to prove to the seller of a home that you’re able to purchase their property.

Annual Percentage Rate – often abbreviated as APR, is the total cost of borrowing money per year as a percentage. 

Arrangement Fees – fees set out by the lender to process your mortgage loan. This can either be paid up front or added to the mortgage

Base Rate – aka ‘The Bank of England Base Rate’ is a rate of interest that the Bank of England sets. Standard variable rate (SVR) mortgage and tracker mortgages will follow this.

Early Repayment Charges (ERCs) – set fees/charges that a lender will charge if you wish to leave your mortgage during a certain period. Any repayment charges will be made clear to you before entering into an agreement

Loan-to-Value (LTV) – this is the value of your mortgage (the amount you borrow) as a percentage of the property value. As a general rule, the people who are borrowing less, get better mortgage rates.

Mortgage Term – the length of time you’ll have to pay back your mortgage. The shorter the loan term, the less you’ll pay back. 

Standard Variable Rate (SVR) – the amount that your mortgage lender will charge once the initial period of your mortgage comes to an end.

Variable Rate Mortgage – a type of mortgage where the interest rate can increase or decrease. This will fluctuate based on the lenders SVR.

How to check your mortgage brokers FCA number

It’s very important to check your mortgage broker’s FCA number before going ahead and working with them. The FCA (which stands for the Financial Conduct Authority) is a regulatory body that oversees the financial industry and ensures that financial institutions and professionals are working in an ethical and legal manner. Your mortgage broker will have an FCA number which is searchable on the FCA register. 

If you already have your broker’s FCA number, click here to search the register: https://register.fca.org.uk/s/

I’m ready to speak to a mortgage broker. Now what?

So you’ve decided to speak to a mortgage adviser. What do you do now?

Before going ahead and working with an adviser we recommend that you check the following three things:

• Reviews – As with any service, reviews are key. If your mortgage broker has great reviews, you can be confident that they’ll provide a similar service with you. Often they will have Google Reviews or a Trustpilot account showing their happy customers’ experiences.

• Location – choosing a local broker/adviser can make a real difference and add a personal touch to your mortgage application experience. This doesn’t necessarily mean that a mortgage broker who isn’t local can’t assist, quite the opposite in fact. But speaking to an adviser who knows the area that you wish to move to can be helpful. Also, in the post-Covid world, many people will return to meeting their mortgage broker face-to-face to go through their application.
• FCA number – as mentioned above, always check your adviser’s FCA number on the FCA register. This will show that they have the correct qualifications and authorisations to process mortgage applications!

Conclusion

And there you have it. The definitive guide to whether you need a mortgage broker, how to prepare for the conversations/applications and how to find the best broker for you. 

Speaking of which… here at Advizure, we match consumers with FCA regulated, local, highly reviewed mortgage brokers. We have a national network of pre-approved professionals that we work with.

All you have to do is complete the form below and we’ll match you with a mortgage broker in your area. They will then use the contact details to get in touch and arrange a free initial consultation. Using Advizure will save you hours of time searching for the right broker!

Disclaimer – while we have made every effort to provide accurate information, the law is always changing and affects each person differently. This article is for general information only and does not constitute professional advice. We do not accept liability if you rely on this information.