Why You Should Use a Professional Mortgage Broker – and what might happen if you don’t
Why use a Mortgage Broker?
Why in the internet age when limitless amounts of information and advice are available at your fingertips would anyone still choose to use a mortgage broker? Add in the advent of comparison sites, and surely anyone with a PC can find their own mortgage.
In many ways the internet’s biggest benefit – its pervasiveness – is also its greatest drawback. With so much information out there it’s almost impossible to know which of it is reputable or accurate, and which of it applies to you. This is especially the case if you’re looking for a specialist mortgage either because of your personal circumstances or because of the peculiarities of the property you want to buy.
This is where a mortgage broker comes in. Combining experience with training and day-to-day hands-on experience of the mortgage market, mortgage brokers are the right people to cut through the confusion and find the most appropriate deal for you.
We’ll take a look at the edge a mortgage broker can give you, as well as discussing what you should look for in a broker and what to ask them before you decide to give them your business.
What is a mortgage broker?
A mortgage broker is a financial advisor who specialises in giving advice about mortgages. Mortgage brokers are specifically trained and qualified in giving this advice, and like all financial advisors in the UK, have to be regulated by the Financial Conduct Authority (FCA).
A mortgage broker works on your behalf to source the most appropriate mortgage for circumstances. They essentially act as a middleman between you, the borrower, and the lender, the bank or building society that lends you the money.
Are all mortgage brokers the same?
No. Some mortgage brokers only work with a small number, or panel, of lenders. This clearly limits the number of mortgage deals that they can search when they are looking for a deal for you.
Whole-of-market brokers on the other hand have access to a much wider range of lenders, giving them more options. In addition, some also have access to direct offers from lenders that may not be advertised more widely.
When you are looking for a mortgage broker, using a whole-of-market brokers, such as the mortgage brokers at Simply Lending Solutions, increases the likelihood of your broker finding the most suitable deal for you.
What is an independent mortgage broker?
The Financial Conduct Authority states that a firm shouldn’t call itself an independent mortgage adviser unless the firm’s product range across the market is ‘unlimited’. However, this doesn’t mean that a firm needs to offer absolutely every mortgage product.
Rather the FCA advises that a firm may be considered independent even if its product range is limited. Any firm that wishes to be considered independent should ensure that its selection of products is broad enough to be representative of products from across the market. In addition, the range of products offered should be reviewed regularly, and shouldn’t materially disadvantage any customer. The firm should ensure that its selection of mortgage products is kept up-to-date.
Simply Lending Solutions, believes that, as a firm, we satisfy the requirements of the FCA to be considered independent mortgage brokers.
So, what are the benefits?
Using a mortgage broker saves you time
A big benefit with using a broker is the time it will save you. From searching for the initial deal to submitting the application, using a mortgage broker takes a lot of the leg work out of the mortgage application process. A good broker will also ensure that you have collected together and submitted all the necessary documentation, which in turn reduces the need for lenders to come back to you for more information, and so slowing down the process.
At Simply Lending Solutions, we also carry out an underwriting exercise of any deal we suggest for you. Put simply, this replicates the underwriting that the lender will carry out enabling us to anticipate any potential problems with your application and address them before the final application is submitted. This in turn minimises the chance of the lender rejecting your application or delaying it to gather more details from you.
Mortgage brokers can help you save money
As already noted, there are a lot of lenders out there, offering a plethora of mortgage products. However it’s not always easy to determine which product is suitable for you and your circumstances.
A comparison site can seem like a great way to find the cheapest product but it’s only once you start to dig into the details of each deal that you find out how much it will really cost. Think of it like finding a budget flight; you think you’ve found a great deal and then you read the small print!
There are multiple variables such as your credit history and current financial commitments which will impact whether you will be eligible for the apparently ‘cheapest’ products or not. A broker will recognise this and be able to source the most competitive deal for you, taking into account your personal circumstances.
It’s also worth remembering that some brokers will have access to direct offers that may not be available elsewhere and will save you money.
All this means that a mortgage broker will help you maximise your borrowing power by finding you a generous mortgage loan amount without overstretching your finances.
As the detail you give your broker will help them determine which lender to use and which deals to consider, it is important that you are able to build up a good, personal relationship with them, as well as ensuring that you are completely honest with them.
Mortgage brokers also understand the best deal isn’t always the cheapest
Determining the best lender to approach isn’t just about saving you money. It’s also connected to the type of mortgage you are after. Amongst the lenders that whole-of-market brokers, like Simply Lending Solutions, have access to are lenders who have a particular understanding of specific groups of people or types of property. They may for example be much more sympathetic toward borrowers who are looking for a mortgage for a listed property.
Alternatively, their general criteria could make them more appropriate than other lenders. A mortgage broker will know which lenders for example consider retained profit when calculating income which might make them a good option for a company director looking for a mortgage.
Mortgage brokers will also be aware of how different lenders will treat state benefits such as disability benefits or child benefit, and how they can help you borrow more by increasing what counts as income.
As mortgage brokers are working in this market every day, they’ll also be completely up-to-date with any changes that lenders may have made to their criteria, as well as being fully informed about any deals.
Peace of Mind
This is a big one. Firstly, mortgage brokers need to have qualifications in order to give you financial advice, all Simply Lending Solutions brokers are CeMAP qualified, which gives you the reassurance that they actually know what they are doing. All our brokers are also subject to on-going compliance checks and training to ensure their advice and knowledge remains relevant
Secondly, mortgage brokers have a duty of care to their clients. If you have found a mortgage yourself and have landed yourself with an unsuitable product because you didn’t read the small print closely enough, then you’ll have very little comeback. However, because of their duty of care, mortgage brokers are obliged to recommend a suitable mortgage for you. If you find out later that the mortgage isn’t suitable because of a broker’s error, you will have the support of the firm and the regulator to resolve matters.
What to look for in a mortgage broker
Once you’ve decided to use a mortgage broker there are a few things you can look for to make the most of all the advantages they provide.
Find out how many lenders they work with
Your mortgage broker will be able to provide you with widest range of potential mortgage deals if they are a whole-of-market broker, rather than a broker working only with a small panel of lenders. A whole-of-market mortgage broker can offer you impartial advice and is independent of any one lender. The biggest choice of deals is offered by whole-of-market brokers like Simply Lending Solutions who also have access to special mortgage deals that may not be available elsewhere.
Think about how they work
You’ll want your mortgage application to progress as quickly as possible. With this in mind, it’s important that your broker understands the balance between providing you with a personal service without making you too dependent on only one person being available.
At Simply Lending Solutions we ensure that you receive a bespoke service from your first appointment, but we also make sure that our whole team is able to update you if they need to. We do this by making sure that we keep your records up-to-date across multiple platforms. This means that someone can always help you, even if your broker is unavailable.
We don’t just operate online either, meaning that you can pick up the phone and speak to human being during office hours. We combine the personal touch with whole-team efficiency.
What types of mortgage do they deal with?
While finding a whole-of-market broker gives you the biggest choice of products, that isn’t the only consideration. You should also check what types of mortgages they are used to dealing with. Some brokers are unfamiliar with some of the more specialist products out there for example, or they may not deal with second charge mortgages.
Our brokers work on a daily basis with specialist mortgage lenders who provide a range of products including mortgages for listed buildings and mortgages for the self-employed. We also have experience in securing second charge mortgages. This is a particular benefit if you are undecided whether you should remortgage or apply for a second charge mortgage, as we can give genuine, impartial advice.
Check when you pay
A mortgage broker should always be transparent about what fees are payable for any mortgage product they recommend, as well as explaining when you will need to pay. Some mortgage brokers ask for a flat fee upfront, while with others payment is due later in the process.
Simply Lending Solutions outline all fees and payments that are due when we outline our mortgage deal recommendations. You don’t pay us anything until we provide a formal mortgage offer
What other services do they provide?
Find out whether the mortgage broker you’re considering does more than just finding you a mortgage deal, important as that is. Many brokers can offer advice on other financial products that may be of particular interest when you are making the commitment to buying a house. At Simply Lending Solutions we can advise you, and help source, life insurance, income protection and critical illness insurance
We also carry out an underwriting exercise that replicates the underwriting that the lender will carry out. The benefit for our clients is that this will flag up any potential issues prior to submission of the application. They can then be addressed which hopefully will mean the actual application will progress more smoothly.
Check they’re registered with the FCA
Anyone providing financial advice needs to be registered by the Financial Conduct Authority. You can see Simply Lending Solutions’ registration here.
You can be reassured by the fact that Simply Lending Solutions is directly authorised by the Financial Conduct Authority
Check for qualifications
All mortgage adviser should have a recognised industry qualification. Every single one of our Brokers has the Certificate in Mortgage Advice and Practice (CeMAP) qualification. This is the mortgage industry’s most recognised qualification
What might happen if you don’t use a mortgage broker?
If you’re still not convinced whether to use a professional mortgage broker just think about the risks of not taking their advice and going it alone.
You could end up with a mortgage that’s not the best one for your situation. A broker will use their experience of working with people like you to find you the most suitable deal.
You might have your application rejected. If you don’t understand exactly what your lender is looking for, what documents to submit or what a lender’s restrictions are you may not apply to the best lender for you.
You don’t have any protection if something does go wrong. The responsibility for sourcing the mortgage is yours alone, so if you do choose the wrong one you have no-one to blame but yourself. If a regulated mortgage broker makes a mistake you have a means of redress.
Hopefully you now understand some of the reasons for using an expert mortgage broker, and how to find one you can trust. If you’d like to arrange your free initial consultation with Simply Lending Solutions, contact us today.