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MONTHLY FEATURE | JANUARY 2024
Thinking of using a mortgage broker to arrange your mortgage? Here’s a guide to help you work out if it’s the right option for you and, if so, how to choose the right broker for your needs
There are currently over just under 6,000 mortgages on the market. That’s a lot of options for
potential homebuyers to sift through, writes Kate Saines.
It’s no wonder then around 82% of mortgages taken out in 2022 were arranged by a broker.
Using a broker is not for everyone. But if you would like to find out more about what they do and how to find the right one, then read on…
What is a mortgage broker?
Sometimes called advisers or intermediaries, a mortgage broker’s job – in a nutshell – is to find you a mortgage. Some will also help you through the process of applying for the mortgage and buying your home.
But there’s more to it than just that…
A good broker will have access to the whole of the mortgage market and they will be constantly communicating with lenders to learn what new products are coming onto the ‘shelves’ and being taken off.
They work with home buyers and those remortgaging to understand their needs, goals, income, outgoings and homebuying plans so they can locate the best deal and rate for them.
Then, once they have worked with their client to find a suitable mortgage, many will also guide them through the application process.
Why use a mortgage broker?
We know 80% of mortgages were taken out using a broker in 2022, but in 2024 this is expected to increase to 89% and then even further to 90% in 2025, according to the Intermediary Mortgage Lenders Association (IMLA).
Why? Well, the last two years have been tough for borrowers – mortgage prices, and therefore repayments, have soared and lenders have changed their criteria. There’s also been an increase in demand for more specialist mortgages and people’s financial situations become more complex.
Having a professional who can tailor your mortgage deal your own very unique circumstances is becoming vital.
And, explained IMLA, borrowers are seeking reassurance in a challenging economic environment
We asked some people who were currently using a mortgage broker to take out a mortgage why they had chosen to use a broker.
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Gini – a first-time buyer
Gini, who is currently in the middle of the house buying process, told us she initially chose to use a mortgage broker because she needed help to calculate what property she could afford to buy and to find the best mortgage deal.
But the broker ended up providing additional support which she had not expected.
“I’m a first-time buyer and our broker has been chasing our solicitor for us too! This was unexpected but it’s been a massive help as I’ve got a baby and a toddler and it has taken a great deal of the load off my husband and me.”
During Gini’s application mortgage rates have fallen. So, her broker has rewritten her mortgage three times as better deals came onto the market.
“They kept us informed at all times, so I knew what was happening to the pricing, and put in quite a bit of effort to make sure we didn’t miss out on the price cuts,” she added.
Tony – a first-time landlord
Tony is currently looking at investing in a buy-to-let property as a way to boost his pension pot in retirement. He decided to use a broker because he needed advice. “I always use a broker for remortgaging my own property because they find the best rates.
“But now I’m looking at buy-to-let I need some really specific, tailored advice and they are helping to explain how the calculations work.”
Here is a summary of some of the reason to use a broker:
• They provide you with access to a wide range of mortgages and rates
• Brokers offer tailored advice which is specific to your needs
• They have the tools to help you calculate what you can afford and how much you can borrow
• If you need support through the mortgage process, they will guide you through each stage
• They can help you find specialist mortgages – for example shared ownership mortgages, first-time buyer options or buy-to-let products
• Exclusives! Often brokers have access to exclusive deals from lenders which are not available elsewhere
What to consider when using a broker
There are a few things to be aware of before using a broker. One of the main considerations is cost. Some brokers are free to use and are paid by lenders once the application is complete, others also charge customers a fee. This is either a percentage or a flat rate.
When researching which broker to use, ask them what fee structure they use and how much the service is likely to cost.
Some brokers work online and you can start the process by answering questions on their website and then book a call with an adviser at the next stage.
Check to see if the broker covers the whole-of-the-market so you know you are getting access to all the deals available. A number of lenders have their own advisers, but they will only recommend products from their own product range.
Finally, check they are qualified – most mortgage brokers and advisers will use the CeMAP qualification.
How to find a mortgage broker
There are a few things you should take into account when looking for a mortgage broker, and we’ve listed these below:
Location
Thanks to the wonders of technology you can carry out the mortgage process by phone or email. So unless you prefer face-to-face interactions, you an search the entire country for your broker-to-be.
Price
It’s worth looking at a few brokers and comparing prices. Fees can be charged as a percentage or a flat fee; either way, brokers are obliged to be upfront about this so don’t be afraid to ask. Most will have this information on their website.
Whole-of-market
Make sure the broker covers the whole of the market. This means they have access to all the mortgage deals available. There were 5,801 residential mortgage options on the market at the end of January and 2,820 buy-to-let products, according to Moneyfacts.co.uk.
Find out what services the broker provides. Will they simply find your mortgage, or will they also do the paperwork, chasing and keep you regularly updated throughout the process? Ask they when and how they can be contacted and make sure this suits your lifestyle.
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Recommendations
If you can’t decide or feel there are too many brokers to choose from, get a recommendation from a friend or family member who has had a good experience. Trust Pilot reviews can also be really helpful.
Estate agent leads
It’s common for estate agents to refer to you to mortgage broker and whilst there is no harm in speaking to the adviser in question, you should check they tick all the boxes we have covered above. Compare them to a few other brokers to get a feel for the service and how they work.
Personality
The broker you choose is going to know quite a lot about you and your finances by the end of the process, so it’s important to work with someone you like and feel comfortable with.
Speak to them on the phone if you can and ask them questions about how the process will work. Do they answer your questions clearly and do they make sense?
And finally…
All that remains is to wish you the best of luck in your search for a broker to help you along the road to taking your mortgage.
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