Should You Use A Mortgage Broker?
There are clear benefits to using a mortgage broker when securing what is likely the most important loan of your life. Acting in the capacity of third party experts, it is their obligation to find you the best deal that fits neatly with your financial criteria. A good broker will also simplify an often complicated process, so you can better understand it and the costs associated with a mortgage.
By sourcing a deal with suitable terms, then helping you navigate every stage of a mortgage application, a broker can be a valuable ally when getting approved for a mortgage. However, it is wise to first assemble the full picture before taking the decision to commit to a broker.
What Is A Mortgage Broker?
A mortgage broker is an individual or company that works on your behalf, sometimes for an agreed fee. They help you decide what kind of mortgage you need, before using their expertise and research to find the best deal.
Whether you are a first-time buyer, or looking to remortgage your home, brokers act as a middleman between you and the numerous lenders in the marketplace. Criteria such as your credit score, size of down payment and your personal preferences are matched against the many deals out there to source the most suitable match.
Brokers have a duty of care to not only to find you the best possible mortgage, but to then explain in the clearest terms why it is the right one for you.
Pros Of Using A Broker
There are many reasons why seeking the professional advice of a broker is a wise choice.
- Their guidance can be invaluable when determining which lender and which mortgage is right for you and your circumstances
- Some lenders work exclusively with brokers. This means there are deals with low rates and very favorable terms that would not be accessible to you should you search independently
- Brokers help to simplify the complicated jargon while making a confusing and intimidating process easier to understand
- A mortgage advisor does the legwork on your behalf then presents you with the most viable options. This can save you a lot of time and energy
- A broker can assist in making the ‘red tape’ involved in mortgage applications a significantly smoother exercise. Complex contracts are broken down and explained in simple English to be better understood
Cons Of Using A Broker
All of the above may lead you to believe that securing the services of a broker is a straightforward decision. Yet, as with almost all aspects of life, there are upsides and downsides when contrasting the reasons for selecting a mortgage broker vs a lender. Accordingly, weighing up the pros and cons is always the best course of action.
- Some charge a flat fee. They are perfectly entitled to do so, but always check the amount beforehand, then factor this into your budget. If what they are likely going to save you is less than what they expect you to pay them, it makes more financial sense to go it alone.
- Others brokers are compensated by a lender or lenders, and this carries certain concerns. Will you be steered towards a deal involving this lender, even if it’s not necessarily the right deal for you?
- Some lenders do not work with brokers. This is a trend that has increased since 2008, when it was revealed that more broker-structured mortgages were defaulting over those involving a direct relationship between the customer and lender. By aligning yourself with a broker you may not have access to some great deals.
How To Find A Good Broker
There are several ways to source a reputable and competent broker who will help find you the right mortgage.
- Ask family and friends for their experiences when purchasing a home. A solid recommendation from someone with no ulterior motive is priceless. This is equally true when hearing about bad experiences, so you know who to avoid
- If you trust your realtor and have built up a good relationship, it can be a good idea to enquire about their preferred brokers
- Reviewing websites for mortgages online can be an extremely useful research resource. Always remember to read reviews left by customers as these can often be helpful and illuminating
When searching out an online mortgage broker, beware of any who demand exclusivity. You are free to work with as many as you wish.
So long as caution is applied, and motives and fees are made explicit before any paperwork is signed, the pros often outweigh the cons when deciding whether to use a broker.
Ultimately, listening to the experiences of others will help you find a trustworthy broker who will work hard for your best interests.