If you plan to buy a home, you may already be imagining your future space. However, before selecting furniture or paint colours, securing a mortgage is essential. This is where a mortgage broker or mortgage adviser can be invaluable. A mortgage broker, also called a mortgage adviser, helps borrowers find the most suitable loan based on their circumstances.
Whether you are a first-time buyer, remortgaging, or purchasing a buy-to-let property, a mortgage broker can guide you. If your mortgage application has been declined, they may help you find an alternative solution. Brokers also assist individuals with unique financial situations, such as self-employed applicants or those with a poor credit history.
They assess your finances, determine borrowing capacity, and recommend a suitable lender. In addition, they handle much of the paperwork, making the mortgage process smoother and less stressful.
What Services Do Mortgage Brokers Offer?
Mortgage brokers offer expert guidance, ensuring you apply for products you are likely to qualify for. They research mortgage deals faster than you could on your own, using their extensive knowledge of the market.
Before choosing a broker, ask about their mortgage range. Some only work with selected lenders, while others offer a whole-of-market service. If using an online broker, they must inform you of any restrictions before you proceed.
How Does a Mortgage Broker Differ from a Lender?
A mortgage broker provides independent advice, searching a wide selection of mortgage products to find the best deal for you. In contrast, a mortgage lender, such as a bank or building society, provides the loan directly.
Some lenders employ in-house advisers who can only recommend their own mortgage products. Like brokers, they are regulated by the Financial Conduct Authority (FCA). However, a broker compares options across multiple lenders, giving you a broader view of available deals.
Can a Mortgage Broker Help After a Rejected Application?
If your mortgage application has been declined, a broker may be able to assist. Being turned down does not mean homeownership is out of reach. Lenders have different criteria, and a broker understands which ones are more likely to accept your application.
For example, if you are self-employed, a freelancer, or recently started a new job, some lenders may be hesitant. Similarly, if your credit history is less than perfect, certain lenders may still offer you a mortgage. A broker helps you find the right lender for your circumstances.
Key Questions to Ask a Mortgage Adviser
When choosing a broker, ensure they are authorised and regulated by the FCA. Ask about their fees and whether they specialise in cases like yours.
Some mortgages are exclusive to brokers, while others are available directly from lenders. Brokers do not have to inform you about ‘direct-only’ deals, but you can ask if any may be cheaper for you.
How Do Mortgage Brokers Get Paid?
Mortgage brokers earn money in different ways. Many receive commission from lenders, which is usually a small percentage of the loan amount. Others charge clients directly, either as a flat fee, a percentage of the mortgage, or an hourly rate.
The FCA requires brokers to disclose their charges upfront. Some fees can be added to your mortgage, but this means paying interest on them over time. The cost of a broker’s service varies, but it typically ranges from £500 to £1,500. More complex applications may incur higher fees.
Documents a Mortgage Adviser May Request
Identification: A valid passport or driving licence, along with proof of address, such as a utility bill.
Proof of Income: Payslips if you are employed, or tax calculations and tax year overviews if you are self-employed.
Financial Records: Recent bank statements showing income, expenses, and outstanding debts. Lenders will also require proof of your deposit.
Once you have chosen a property, your broker can submit a full mortgage application on your behalf, ensuring a smooth process.
Useful Resources
For further guidance, check our First-Time Buyer Mortgage Guide, which explains the process of getting onto the property ladder.