A mortgage broker is a qualified advisor who can help you find a mortgage to suit your personal finances, needs, objectives and personal situation. You are essentially paying for the brokers to do the leg work. All brokers work differently. Some brokers search the whole of market (these don’t include deals you can obtain by going direct to a lender), some have a panel of lenders and others are tied to just one lender.
There are different kinds of brokers. You might find a one man band mortgage broker, working out of the comfort of their own home. No administration department, doing the fact find, processing the mortgage, collecting the documents and certifying the documents, all on their own. Or part of a large organisation, hundreds of advisors working as if they were part of a machine. Each brokerage will display similarities and differences but one thing that will always stay the same is the fact that they will charge for their services, but some don’t charge you a fee, they rely solely on the commission.
Each broker firm will charge differently, make sure that you ask your broker which method of payment they use, so you don’t have any nasty surprises at the end of your application. The methods are:
An advisor will agree to arrange your mortgage for a fixed amount of money. This should be agreed in writing so there isn’t any room for dispute.
Some advisors will charge per hour. If this is they preferred method, make sure you query how long the work might take, so the advisor will estimate and you can roughly know how much you’ll have to pay.
If a mortgage advisor is ‘fee free’, they will most probably be receiving payment in the form of commission from the lender. If an advisor states that they are ‘fee free’, ask them to define what they mean so you can’t be misled.
Some advisors will charge you a percentage of your mortgage e.g. a 1% charge for a £300,000 mortgage would equal a £3,000 fee. Some advisors will cap fees to a certain percentage but ultimately it depends on the firm.
Some advisors will charge fees and receive commission on top of this. Others will charge fees but will agree to cap them at a certain percentage of the mortgage.
You can find extra information about the Brokers’ fees in their terms and conditions shown on their website. You can also find information about facts and costs on the disclosure document that should be sent to you.
Our client’s story:
“We used a local Independent broker first that my accountant suggested, was terrible. They tried with 3 high street banks, in which none passed AIP and all left a mark on my file.
They said to wait a year…
So I went to London and Country upon the referral of my brother. They were hit and miss. It previously took them up to 6 days for them to upload documents to the lender upon receiving them.
Took them up to 3 days to call us back after leaving a message to our case manager 3 days in a row. We ended up calling the mortgage company to find out what’s happening as it turned out to be faster.
I think they struggle with complicated cases such as ours.
A default, both shareholders and 1 years accounts as ltd.
But if they do get us a deal, which looks likely after this issue, obviously I’ll be really happy that despite our circumstance.
In future I will/ would recommend to search for brokers familiar to people in a similar circumstance as it would certainly be worth the investment.”
Obviously it is your choice whether you use a broker but they can be particularly helpful if; you rely on irregular freelance earnings, you are raising a mortgage on a second property to pay the deposit on the first or you need a bridging loan. There are also many advantages to working with a broker, e.g. they know the market well and are up to speed with latest deals, they know which lenders are comfortable with unusual circumstances, and they will offer advice and guidance throughout the process and will act as your advocate with the lenders, making the process less stressful for you. Occasionally they can obtain some very good deals as well.
To get ahead of the game, you should research mortgages so you understand the basic types and the differences between them. At least then you’ll be walking into the process with knowledge. You could potentially look at using on-line comparison tables to get an idea of how much you can borrow with the deposit you have.
Here at Active Brokers, we try to take the stress out of applying for a mortgage. We are expert brokers with a motivation to get you your dream home! If you think you could benefit from speaking with a broker, get in touch with us for a free strategy call!
Get in contact with us via phone or email:
01245 850150 OR email@example.com
Or Get the Book! //activebrokers.co.uk/book/
Gary Das, owner of Active Brokers and expert mortgage broker, has written a book sharing his ‘ACTIVE’ framework for giving the self-employed, business owners, and entrepreneurs a head start when they start the search for their dream home. This book has been written from first-hand experience to guide you through the journey to get the home of your dreams.