Mortgage broker Mortgage Talk runs through the questions you should ask when you are looking for a mortgage advisor.
1) How Independent are you?
Many brokers that describe themselves as independent will actually work from a panel of different providers that are representative of the market. Truly independent mortgage brokers that can deal with any lender will therefore often describe themselves as ‘whole of market’.
2) Which lenders’ products can you offer me?
If a panel is being used, find out how many lenders are on it. Anything less than 10 is no good. Larger panels should be sufficient for most borrowers, and, in many cases, lenders may offer preferential service to the broker.
It’s worth asking whole of market advisors how many different lenders they have used in the past year. Around 70 is a reasonable answer.
3) What level of service do you provide?
Before you commit to a broker, get them to talk you through the process from start to finish, and find out whether they will make an actual recommendation or only provide information. Those offering the most comprehensive service will help you through the application process right the way through to completion.
4) How do you operate?
Mortgage advisors operate over the phone and face-to-face. Both work well, so your choice will ultimately come down to personal preference. The important point is that they are easy to get hold of and that you understand their advice.
5) Are you regulated by the Financial Services Authority (FSA)?
When you buy a mortgage with advice, the FSA states that you have a right to expect the advisor to only recommend products and services that are suitable for you. If the recommendation is unsuitable, based on the information you provide, you can complain to the firm and expect compensation for any loss.
Reputable advisors should declare this straightaway. However, if you are unsure, check on the FSA’s mortgage website.
6) How will you be paid?
Some mortgage advisors will charge a fee for their service – typically, around 1 per cent of the sum you are borrowing. Others don’t charge you at all and are instead paid a commission by the lender whose mortgage you buy. Some borrowers prefer to pay a fee as it means there’s no incentive for advisors to push loans paying the highest commissions.
However, following the introduction of tighter rules surrounding the sale of mortgages and steep penalties for those that break them, borrowers should not feel unduly concerned about using commission-earning advisors.
7) What other services can you offer me?
A good advisor will recommend protection such as life cover and home insurance when you take out a mortgage, because it’s important to be adequately coverer.
But it’s not uncommon for a broker to be whole of market in terms of the mortgage providers they use, but tied to recommend one particular provider for other services. If you are not happy with this, there’s no harm in shopping around for these extras yourself.
8) What can you offer me that a lender can’t?
This question may stump some mortgage advisors, but ultimately there are distinct benefits of using a broker over going direct to the lender. These include impartial advice, access to the most suitable and competitive deals on the market, and assistance through the application process and beyond.
Advisors will also often negotiate special deals which wouldn’t be available direct from the lender, and your legal or valuation fees could be refunded too.
9) Why are you offering me this product?
This question shouldn’t really need to be asked – if the advisor has listened to you requirements, the recommended mortgage should clearly reflect this. Brokers are required by law to give written confirmation explaining their proposal, but it’s always worth asking them to talk you through their reasons first, just to check they have understood your needs.
10) What next?
So you’ve listened to their advice and taken out a mortgage, but this doesn’t mean the end of the relationship with your mortgage advisor. The service will often be a one-off, but many advisors will offer ongoing support and get in touch with you when your special rate expires and you’re due to re-mortgage.
