Do you need a mortgage broker?
Key takeaways:
Expertise: Mortgage brokers provide valuable guidance and have access to a wide range of mortgage products across multiple lenders, potentially securing more suitable deals and simplifying the application process.
Tailored and fee-free: Many brokers, like Better.co.uk, offer personalised mortgage advice tailored to your financial situation. Some, again like Better.co.uk, provide fee-free services by earning commissions from lenders.
Risks of going directly to a lender: Applying directly to a lender limits your options to their specific products, which could mean missing out on more suitable rates or terms elsewhere. It also requires more time and effort to compare different offers.
Protection and recourse: Using a mortgage broker provides added protection, as you have recourse through the Financial Ombudsman Service if the mortgage advice is unsuitable.
Choosing the right broker: It's essential to select a reputable and unbiased broker who can access a broad range of lenders, ensuring you get the best possible mortgage deal for your needs.
Early consultation is crucial: Speak to a mortgage broker early in your property journey to save time, effort, and potentially money while increasing your chances of mortgage approval.
What is a mortgage adviser or mortgage broker?
A mortgage adviser or broker can be an independent broker, an independent mortgage broker, or work for a company. Your broker will arrange a mortgage between you and a lender, whether you’re buying a new property, remortgaging your existing home, or are a first-time buyer.
They work with you to understand your mortgage needs and personal situation and will explain the different types of mortgages available. A mortgage adviser will help you choose the right mortgage for you. They will find you a deal by searching the market for suitable available mortgages to fit your requirements. And they will also help you with the mortgage application.
What are the benefits of using a mortgage broker?
Firstly, you don’t have to use a mortgage broker; you can instead directly apply with a lender.
However, here are the benefits of using a mortgage broker like Better.co.uk:
Expertise - Mortgage brokers have a wealth of experience and in-depth knowledge of the mortgage industry, lenders and their different criteria. They can provide valuable advice and guidance to help you make an informed decision.
Access to deals - Brokers can access various mortgage deals, saving you time and effort researching and approaching multiple lenders.
Easy comparison - A mortgage broker will provide you with multiple mortgage options from lenders they think will suit you best. This means you can compare interest rates, terms, fees, and features more easily.
Simplified process - Mortgage applications can be complicated and require a lot of paperwork. A broker can streamline the process and ensure all necessary documentation is submitted accurately and on time.
Tailored recommendations - A mortgage broker can recommend products that align with your financial goals and needs.
Fee-free advice - Some brokers offer fee-free advice, meaning they do not charge clients directly but earn commissions from lenders. This can save you money and ensure transparency.
Better.co.uk has access to over 12,000 mortgage deals from 100+ lenders across the market by being part of a dedicated mortgage panel. Our advisers also have detailed knowledge of the different mortgage products available from different lenders and government homebuying schemes that you could take advantage of. It’s what they do every day. Doing this by yourself will take a lot of research.
They will also support you on your application and guide you through the paperwork, which can often be confusing and stressful. A good mortgage adviser will also advise you on improving your chances of being accepted for the mortgage; this is crucial for first-time buyers with a small deposit or if you’re self-employed.
Mortgage broker vs going direct to a lender: after you have received a mortgage recommendation
Feature | Proceeding with the broker | Going direct to the lender |
|---|---|---|
Access to tailored deals | You've already received a tailored mortgage recommendation that aligns with your financial situation and goals, ensuring you get the most suitable deal. | By going directly to the lender, you may be limited to what they offer at that moment, potentially missing out on the best rate or terms that the broker has already secured for you. |
Guaranteed rate and terms | Your broker has already negotiated the most suitable rate and terms with the lender, considering your unique profile. | Directly approaching the lender may not guarantee the same rate or terms, especially if your application doesn't perfectly match their criteria. |
Streamlined process | Your broker will handle all the paperwork, application submissions, and follow-ups, ensuring everything is accurate and timely. | Going directly means you’ll need to manage the application process yourself, which can be time-consuming and prone to errors. |
Support and advocacy | The broker acts as your advocate, addressing any issues that arise during the mortgage approval process and negotiating on your behalf. | Without the broker, you might have to navigate any issues or negotiations alone, which could lead to delays or less favourable outcomes. |
No additional fees | The broker's service is often fee-free, with costs covered by lender commissions, meaning you get expert service without extra charges. | While there are no broker fees, going directly doesn’t offer you any added value in terms of savings, and you might miss out on better deals. |
Protection and recourse | If the mortgage advice turns out to be unsuitable, you have the right to complain to the Financial Ombudsman Service, giving you added protection. | If you proceed directly with the lender and encounter issues later, you're fully responsible with no recourse for independent review or complaint through the broker. |
Why Stick with the broker after getting a recommendation?
After your broker has done the legwork to find the most suitable mortgage deal for you, going directly to the bank can be risky. The rate and terms you've been offered are the result of the broker's expertise and relationships with lenders, ensuring it's the most suitable option for your situation.
By sticking with your broker, you’re not only saving time and effort but also securing the peace of mind that comes with professional guidance and support throughout the process. The broker’s continued involvement helps safeguard your application, providing advocacy, and ensuring everything runs smoothly from start to finish.
How to find a mortgage broker
The mortgage broker you choose will significantly impact your mortgage application process. Finding the right mortgage broker or adviser can significantly impact your mortgage application process. A good one will make the process smooth and could save you time and money by finding you the right deal.
Here are some steps you can take to help you find the right mortgage broker:
1. Check broker reviews from previous and existing customers. Testimonials can provide insights into a broker’s reputation and customer service. You should also ask friends and family for recommendations, ask about their experience, and ask whether they’d use the broker again.
2. Remember to check that the mortgage broker you choose is regulated by the Financial Conduct Authority (FCA).
3. Compare the fees associated with each broker on your shortlist; some may come with large fees, whereas other mortgage brokers, like us, won’t charge you anything. All mortgage brokers must be upfront with you and clearly outline any charges and their commission before entering into a contract on your behalf.
4. Find out how quickly they can start working on your application. Ask for a suggested timeframe for the completed mortgage to evaluate this against your expected timeline to complete your purchase. Remember, they can control when they start working on your case but can’t necessarily control how long the application takes. This will depend on the lender, but your broker should be able to advise on potential timescales.
5. You must also trust your broker. Remember, you’ll be sharing personal information and financial details with them. Do you like the way they talk to you? Do you find the advice they’re giving you helpful? Does it feel like they’re doing everything they can? And is their advice tailored to your needs? If yes, then great. If not, you may want to consider looking elsewhere.
Mortgage broker FAQs
You should speak to a mortgage advisor right at the start of the process. It might be your first mortgage, a move to a new property, or a remortgage. Whatever your circumstances, getting professional help immediately will save you time and effort in the long run. A good broker will understand the mortgage process, explain everything you need to know, and help you with your application.
Choosing the right broker should also save you money on your mortgage. With the right knowledge, experience and access to deals, they should find you the most suitable mortgage rates and terms for your needs.
First and foremost, if you don't get mortgage advice, you could miss out on the right deal by not tapping into the insight of an experienced broker. You could end up applying for a mortgage that doesn't suit you. Or you could apply for a mortgage where you don't meet the lender's criteria.
Secondly, if your mortgage later turns out to be unsuitable, you have more rights if you take mortgage advice. You can file a complaint and even take this to the Financial Ombudsman Service.
If you don't take advice, you must take responsibility for your mortgage decision.
Mortgage broker fees are the fees that are paid to a mortgage broker when they arrange a mortgage with a lender on your behalf. Whether you’re applying for a mortgage on a new property or remortgaging your existing home, mortgage broker fees usually consist of:
A broker fee paid by you
A procuration fee (or proc fee) paid by the lender
In many cases, you will pay the broker fee once you’ve agreed to go ahead with a specific mortgage deal. In other cases, you will pay this fee when your mortgage application is successful. The procuration fee is paid by the lender once the mortgage is completed.
There can be huge variances in mortgage broker fees. Some brokers will charge hundreds of pounds, whereas others, like us, won’t charge any fees at all.
Brokers that charge fees will either do so as a flat fee or as a percentage of the mortgage, typically between 0.5 and 1%. You may find that if your mortgage needs are more complicated, your fee will be higher.
We don’t charge any broker fees; instead, we receive a commission from the lender when you complete your mortgage. Before we apply on your behalf, we’re transparent about how much we’ll earn in commission from the lender.
Working with an online mortgage broker like Better.co.uk means you should get access to the most suitable mortgage deal for your situation. We have working relationships with lenders and know when new deals may become available.
Yes, you can do your research across multiple lenders, but without industry experience, there’s no guarantee your final choice will be the right fit. Or the most suitable rate.
You can expect to pay between £350 and £500 for a flat mortgage broker fee. For fees that are paid as a percentage of the mortgage deal, on average this can range from 0.3% to 1%.
So, how much will you pay? Let’s take the example of borrowing £135,000. If your broker has a mortgage fee set at 0.3% you would pay £405.
If your mortgage deal falls through, you may still have to pay a broker fee depending on the fee structure of your chosen broker. It’s essential to have absolute clarity on this before going ahead with an application.
Make sure you get a written quote from your chosen mortgage broker. At this stage, you can also ask your broker how their fee is justified. For example, using a broker should secure you the right deal, which means you spend less money on your mortgage over the long term.
If your mortgage broker charges a broker fee for securing your mortgage, you will need to pay this fee. They will also likely charge a procuration fee to the mortgage lender, as a percentage of the amount borrowed.
The procuration fee will be paid by the lender and not by you.
Mortgage broker fee structures are all unique and will depend on the individual broker.
Whilst all will charge a procuration fee paid by the lender, some will also charge you a broker fee. Others won’t charge a broker fee and will simply get paid via the procuration fee. These are referred to as fee-free brokers.
Just remember, that this differs from fee-free advice. The latter means they will provide initial advice at no charge, but may well charge you a fee if they can find you a mortgage. Transparency on this is key.
For either a remortgage or a new mortgage, you need absolute clarity on how your broker gets paid. They must be upfront with you on their fee structure and clearly outline their charges and commission before they enter into a contract on your behalf.
You might have read that you can apply for a mortgage directly with a lender. Which is true. So is a mortgage broker worth it? The short answer is yes. Mortgage brokers have direct relationships with lenders and can look at all the available deals right across the market (if they are whole-of-market). They will also likely have access to deals that individual people can’t get.
If you opt for a mortgage broker, you should get the most suitable deal possible. This in turn can save you money on your monthly repayments and on the full amount you have to pay over the term of the mortgage. By cutting costs in this way, the broker fee should more than pay for itself.
A good mortgage broker doesn’t just save you money. They have existing relationships with lenders and assist during the mortgage application by:
Ensuring mortgage underwriters have all the information they need
Answering quick questions from mortgage underwriters
Liaising with your conveyancing solicitor
Keeping you updated at each stage
Nothing! Better.co.uk are a fee-free mortgage broker.
At Better.co.uk, we get paid by the mortgage lender when you complete your mortgage or remortgage. We’re a fee-free mortgage broker for most customers, so we only take the procuration fee from the lender.
Before we apply on your behalf, we will provide you with the full product information, breaking down all the fees we earn from the lender. We can also arrange insurance.
Again the insurer pays us when you complete your home purchase and your insurance coverage starts. We will also be upfront with these fees.
Mortgage resources
What people are saying about Better.co.uk...
Get a mortgage with Better.co.uk today
Remortgage customers saved £513 a month in July 2024*
Better.co.uk is a fee-free mortgage broker
4.8-star Trustpilot rating from over 8,700 reviews
Compare mortgage deals from over 100 lenders
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Fund a big expense with a Homeowner Loan
Important info & marketing claims
You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
*The savings figure of £656 is based on Better.co.uk remortgage customers in April 2024. Read more on our marketing claims page.
We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.
Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.
Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.
As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.
For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.
