Mortgage brokers have specialist knowledge of the lending market. They guide potential buyers, who need to find a mortgage to purchase a property, through the huge range of deals, interest rates and incentives available. The mortgage broker offers financial advice and recommends the most appropriate mortgage for the buyer. Whether you are a first-time buyer, are re-mortgaging or are buying to let, a mortgage broker may make the entire process a lot easier
A broker will assess your financial circumstances in order to establish how much money it is possible for you to borrow. You will be asked about your credit history, income, outgoings, and will be asked to provide a pile of documents to prove your circumstances. Be prepared to dig out pay slips, bank statements, P60s, utility bills, passports…
The broker will discuss the repayments you can afford, the best interest rate, whether it is fixed rate or variable, and will try to get you the best deal for your circumstances.
You will be guided through a lender application form by the broker. Once you have completed this, stating the amount you wish to borrow (on the advice of the broker) this will be submitted to the lender for approval. Following credit checks, the lender may send round a valuer to look at the property you are hoping to buy. The aim of this visit is to establish that, if you are unable to keep up mortgage repayments and the lender needs to sell your property to regain the loan, the property is definitely worth as much as you are asking to borrow. The lender will then make you a mortgage offer.
Be aware that there are three types of mortgage broker. Some are tied to specific lenders or just one lender, which means that they will only recommend these specific mortgages. This type of broker usually charges commission on the mortgage rather than an upfront fee.
Other brokers can recommend lenders from a panel or selection, which represents a limited section of the entire market. They can still claim to be whole of the market brokers, as long as the panel on offer is representative of all lenders.
There are also independent brokers, who are not tied to any lenders. They can recommend lenders from the whole of the market. This means they may be in a better position to offer genuinely impartial advice, although the advantage of tied brokers is sometimes that although they have a limited range of products to offer, they may have better deals on them.
You can normally find mortgage brokers by asking around. Word of mouth is the best recommendation for any service. If you think the property you are buying may be difficult to get a mortgage for try asking the vendor (the current owner), if he or she can recommend a mortgage broker.
If you are still having problems finding a broker, follow up adverts you see in the press. It is a competitive market, so some may be offering incentives. Otherwise, have a look at Mortgages, which offers a comprehensive list of brokers.
Do not settle for the first broker you see. Fees vary, so phone a few to get the lowest price.