What is a mortgage broker and do you need one?

, by Matt Stevens

Buying or selling a property can be a complex and stressful experience. Whether you’re new to the property market, struggling to secure a mortgage, or simply don’t have the time to find the best deal, it's easy to feel overwhelmed when searching for your next home.

However, one effective way to navigate the process is by seeking the guidance of a mortgage broker. A mortgage broker can simplify the journey and help you make the most of your money. If you're not sure what a mortgage broker does, you might have questions - like what services they provide and how much they typically charge.

That’s why we’ve put together this guide to answer your questions and address any concerns you may have. In this guide, we’ll cover:

Once you have all of the information you need about what a mortgage broker can do for you and what the benefits of using one are, you can decide whether it’s going to be the right move for you. Read on to find out more.

What is a mortgage broker?

A mortgage broker is a licensed professional who acts as an intermediary between you, the borrower, and mortgage lenders, such as banks or building societies. They assess your financial situation, understand your mortgage needs, and provide expert advice to help you navigate the mortgage market.

By comparing a range of products from multiple lenders, they find the most suitable mortgage deal for your circumstances. Additionally, they handle all the paperwork and administrative tasks involved in the mortgage application process, ensuring a more efficient experience for you.

Get Personalised Quote

What does a mortgage broker do?

A mortgage broker helps you find the right mortgage for buying a property or remortgaging your current home. A good broker offers end-to-end support throughout your home-buying journey, addressing any concerns and answering all your questions along the way.

Here’s what you can expect when working with a mortgage broker:

  1. Initial consultation: Your mortgage broker will begin by meeting with you to fully understand your financial situation and review your existing documents.

  2. Finding the right mortgage: They will then search through available mortgage options to find the best deal that meets your needs, presenting a shortlist in a clear and concise format to help you make an informed decision.

  3. Application process: Your broker will guide you through completing the mortgage application, ensuring all forms are accurately filled out and accompanied by the required documents. They will then submit the application to the lender on your behalf.

  4. Finalising the agreement: Once approved, your broker will help finalise the contract with the lender, oversee the signing of the mortgage agreement, and ensure you fully understand every aspect of the document.

Having an expert guide you through the process - especially as a first-time buyer - can be invaluable, significantly reducing stress and making the experience much smoother.

Benefits of using a mortgage broker

While you can buy a home without a mortgage broker, you might wonder why it’s worth paying for their assistance. Let’s explore the key benefits of hiring a mortgage broker:

  • Save time: Searching for the best mortgage deal can be incredibly time-consuming, especially when you're managing other aspects of buying or selling a home. A mortgage broker, with their in-depth market knowledge, can quickly find the best deal for your situation, saving you hours of research.

  • Save money: A good mortgage broker will not only find the most suitable interest rate but also help you consider all associated fees and charges, ensuring you get the most affordable option overall.

  • Access more products: Mortgage brokers often have access to a wider range of mortgage products, including some not available to the general public. Their industry connections and knowledge can help you secure the best possible deal.

  • Receive expert financial advice: Certified mortgage brokers are qualified to provide expert financial advice. They will work to get you the most affordable mortgage for your circumstances and help you avoid common mistakes in the home-buying process.

  • Assistance with paperwork: Applying for a mortgage involves a significant amount of paperwork. A broker can help ensure all forms are completed correctly and that you have the necessary documentation, reducing the risk of delays or application issues.

  • Manage the application process: Beyond paperwork, a mortgage broker can handle the entire application process for you, keeping you updated on its progress and addressing any delays or issues. This allows you to focus on other important tasks.

  • Help with essential insurance: When securing a mortgage, you'll need various insurance products like life, home, mortgage, income, and critical illness cover. A mortgage broker can guide you in choosing the right insurance products to protect your future and provide peace of mind.

Do I need a mortgage broker to buy a house?

You don’t need a mortgage broker to buy a home - you can choose to secure a mortgage on your own. However, there are significant advantages to hiring a mortgage broker that might make their assistance worthwhile. To help you decide which approach is best for you, let’s look at the pros and cons of both options.

Finding a mortgage on your own: pros and cons

Advantages:

  • Access to exclusive direct deals

  • No broker fees

Disadvantages:

  • No access to broker-only deals

  • Limited market knowledge, making it harder to find the best deals

  • Researching and comparing options can be time-consuming

  • No support with the application process

  • Need to arrange insurance separately

Using a mortgage broker: pros and cons

Advantages:

  • Access to exclusive broker-only deals

  • Expert market knowledge

  • Saves time by handling research and negotiations

  • Provides support throughout the application process

  • Assists with arranging insurance

Disadvantages:

  • No access to direct-only deals

  • Broker fees

Why use a mortgage broker?

The expertise of a mortgage broker can be invaluable, particularly if you need a specialist lender to match your financial situation. For example, if you have a bad credit history, a broker can provide advice on improving your credit score and suggest suitable mortgage products with higher approval odds. This reduces the risk of applying for the wrong product, which could result in a rejection that negatively affects your credit record.

If you want to get an idea of your current eligibility before you apply for a mortgage, you can use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you to discern any possible mistakes or fraudulent activity on your profile, so that you can quickly deal with such problems. The trial and subscription can be cancelled at any time.

Moreover, a good mortgage broker works solely for your benefit, not for a bank or building society. Brokers are regulated by the Financial Conduct Authority (FCA) and are committed to finding the best possible deal for you. They have a vested interest in ensuring your satisfaction to maintain a long-term relationship with you.

Is a mortgage broker worth it?

One of the main reasons people hesitate to use a mortgage broker is the concern over additional fees. This is understandable, especially when you're about to make a significant financial commitment like taking out a mortgage. That said, it's important to know that hiring a mortgage broker can actually help you save money in the long term.

The mortgage market can be surprisingly complex. A deal that appears to offer the best value might not actually be the most cost-effective once all associated fees and charges are considered. A mortgage broker can help by evaluating all potential costs and presenting them in a clear and straightforward way, making it easier to identify the best overall deal. In many cases, the savings a broker helps you secure can outweigh the fees they charge.

When choosing a mortgage broker, consider whether they are independent or tied to a specific lender, such as a bank or building society. Tied brokers can only offer products from one lender, so if you want access to a wider range of options, it’s better to work with an independent broker who can explore the entire market (like us).

Can a mortgage broker help me sell my home?

While a mortgage broker primarily helps with securing a mortgage, a great broker can also guide you through the financial aspects of selling your home if you're moving. They can help ensure your finances are in order and assist with options like porting your current mortgage to your new home, advising whether it's the right choice for you, and managing the process to ensure a smooth transition without unnecessary complications.

Can a mortgage broker help me remortgage my home?

Yes, a mortgage broker can help you remortgage your home, saving you money by securing a better rate. Although remortgaging is generally less time-consuming than buying or selling a property, it can still be challenging to find the best deal. If you're short on time or unsure about navigating the options, a mortgage broker can assess your needs and guide you through the process, making the switch easier and more efficient.

Switch Mortgage

What’s the difference between a mortgage advisor and a mortgage broker?

In practice, the terms ‘mortgage advisor’ and ‘mortgage broker’ are often used interchangeably. Both are trained and certified professionals who help you find the best mortgage deal tailored to your needs and guide you through the home-buying process. Whether referred to as an advisor or broker, their role is to support you in securing the most suitable mortgage and navigating the application process.

How to choose a mortgage broker

If you've decided to enlist a mortgage broker to help you find the right deal and guide you through the buying process, choosing the right one is vital. Here are the key factors to consider:

  1. Preferred communication method: Consider whether you’d prefer to meet with a broker face-to-face or communicate remotely. If you have a busy schedule, a phone-based service might be more convenient. Conversely, if you value personal interaction, look for a local broker you can meet in person.

  2. Customer feedback: Research the experiences of other clients to gauge the broker’s reputation. Check reviews on verified platforms like Trustpilot rather than relying solely on testimonials provided by the broker themselves.

  3. Qualifications: Ensure the broker is properly qualified. In the UK, a mortgage broker should have the Certificate in Mortgage Advice and Practice (CeMAP). This qualification, recognised by the Financial Conduct Authority (FCA), ensures they are trained to offer sound advice.

  4. FCA regulation: Verify that the broker is regulated by the Financial Conduct Authority (FCA). FCA regulation ensures the broker adheres to industry standards and provides a level of protection for you. You can check a broker’s FCA registration using their online register. Our reference number is 754691.

How many mortgage brokers should I contact?

While it might seem like a good idea to contact multiple mortgage brokers to explore a wide range of deals, this approach can be counterproductive. Here’s why:

  • Focused attention: A single broker can only provide the best service if they fully understand your needs and circumstances. Multiple brokers might lead to fragmented advice and confusion about the available offers.

  • Credit impact: Each broker will submit applications to lenders, which involves a credit check. Multiple credit checks can negatively impact your credit score and may signal financial instability to lenders, potentially leading to rejection.

  • Tracking offers: Managing offers from several brokers can be challenging and may result in losing track of the best deals. Regular communication with one broker ensures you stay informed about the most suitable options.

  • Fees: Using multiple brokers could result in paying multiple fees, which is generally unnecessary.

When should I speak to a mortgage broker?

Ideally, you should consult a mortgage broker as early as possible in the home-buying process. Starting early ensures that your mortgage application is in place before you begin seriously searching for a property. This preparation can prevent you from missing out on your dream home due to financial readiness.

If you're looking to remortgage, it’s best to contact a mortgage broker about three months before your current deal ends. This timing allows you to explore the best options and secure a new deal before your existing product’s introductory period or minimum term expires.

What information will a mortgage broker need?

For your initial meeting with a mortgage broker, you'll need to provide key details and documents to help them understand your financial situation. Organising these documents in advance not only benefits your broker but also helps you get a clearer picture of your own finances.

You'll need to bring:

  • Bank statements: For the last three months

  • Payslips: For the last three months (if employed)

  • Business accounts: For the last two years (if self-employed)

  • Most recent P60: Shows your tax paid for the last financial year (find more info on the Government’s website)

  • Proof of identity: Passport or driver’s licence

  • Proof of address: Most recent utility bill

Having these documents ready will allow your broker to start finding the best mortgage deal for you right away.

Questions to ask a mortgage broker

When meeting with a mortgage broker for the first time, it’s important to ask key questions to assess their expertise and ensure their services align with your needs. Here are some essential questions to consider:

  1. Are you tied to any bank or building society? Some brokers are tied to specific lenders, which limits the range of mortgage products they can offer. Asking this question will help you understand whether the broker can provide a broad selection of deals or only those from a single lender.

  2. How will you be compensated? Inquire about the broker’s payment structure. They may charge an upfront fee, receive commission from the lender, or a combination of both. Many prefer brokers who charge a fee directly, as this can help ensure unbiased recommendations not influenced by lender commissions.

  3. How long will the process take? Ask how long the broker expects the research and application process to take. If you have a specific deadline, mention it to see if they offer expedited services to meet your timeline.

  4. Do you offer insurance products? Since many mortgage providers require insurance, find out if the broker can offer advice on insurance products. A broker who provides insurance services can ensure you have the right coverage and save you time by handling these arrangements.

  5. Why is this mortgage product right for me? When a broker recommends a mortgage, ask them to explain why it’s suitable for your situation. A good broker should be able to clearly outline the benefits and terms of the product, helping you understand why it’s a good fit.

  6. How can you assist me in the future? A good broker should offer ongoing support. Ask about their services for future needs, such as reviewing your mortgage periodically, finding better deals, or assisting with future property purchases or moves.

Mortgage broker costs and fees in the UK

Mortgage broker fees in the UK can vary widely based on the type of service and the complexity of securing the best deal for you. Here’s what you need to know about how brokers are compensated:

Types of broker fees

  • Upfront fees: Some brokers charge a one-off fee upfront for their services. This can provide peace of mind that their recommendations are based solely on your best interests, rather than commission from lenders.

  • Commission from lenders: Many brokers earn their fee through commission paid by the lender once your mortgage is approved. While some brokers promote themselves as ‘fee-free’, it’s worth considering that those who charge an upfront fee may offer unbiased advice, as their income isn’t dependent on lender commissions.

  • Combination fees: Some brokers may charge both an upfront fee and earn commission from lenders.

Why fee transparency matters

Choosing a broker who charges a clear, upfront fee can often be more beneficial in the long run. If a broker with a fee finds you a better deal than a fee-free broker, the long-term savings may outweigh the cost of the fee.

At The Mortgage Genie, we prioritise transparency. Our initial consultation is always free, allowing us to understand your needs without any obligation. Once we have a clear picture of what you require, we will inform you if a fee is necessary. Our fee will never exceed 1% of your mortgage amount and will be discussed and agreed upon before you proceed with your application.

We hope this guide helps clarify what mortgage brokers do and whether their services can benefit your property purchase. For more information about the industry, check out our other mortgage guides packed with useful insights.

At The Mortgage Genie, our expert mortgage brokers are both knowledgeable and well-connected, enabling us to find the best mortgage products tailored to your needs. In addition to comprehensive mortgage advice and support, we also offer a range of home insurance products to ensure you're fully protected when buying a home.

To get started, use our mortgage calculator to estimate how much you might be able to borrow. Then, reach out to us - we’re here to assist you every step of the way.

Contact

033 33 44 33 72

Registered Office: 2 St Stephen's Court, St Stephen's Road, Bournemouth, Dorset, BH2 6LA

Useful Links

Company Information

The Mortgage Genie Limited is Registered in England and Wales with Company Number 9803176. The Mortgage Genie Limited is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority. Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority. The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Depending on the complexity of your mortgage there may be a fee for our mortgage advice and arrangement service, which will be discussed and agreed before you make a mortgage application. A typical fee is £293 and will never be more than 1% of the mortgage amount.

© 2024 The Mortgage Genie