What is a mortgage broker?

A mortgage broker is someone who specialises in mortgages. They’re also known as mortgage advisers – the term is interchangeable.

As a rule, they have lots of experience and a huge wealth of knowledge which homeowners can take advantage of, and they will often scour all the deals available – so you get the one which is best suited for you.

There are two main different types of mortgage broker:

• Tied or multi-tied brokers: These providers only work with a single lender or a small number of lenders
• Whole of market brokers: These advisers have a much ‘broader’ view of all lenders, and look at the widest range of products

Tied or multi-tied brokers can only recommend a few lenders, but they may be able to offer you deals, perks and incentives from the lenders they have a relationship with. Whole of market brokers tend to be independent and impartial, and because they’re not tied to a set of lenders, you’ll have more choice – however, they can’t cover every single option available.

What do mortgage brokers do?

Mortgage brokers help you (and the people you’re buying with) get the best possible deal, and ensure you choose a mortgage which works for you.

Many people are sceptical of mortgage brokers, and believe that they’re only interested in pushing expensive mortgages which they can then earn commission on. This isn’t the case – these brokers have a duty of care towards you, are legally bound to find you the best-possible mortgage, and then they have to be able to justify why it’s right for you.

Why should I use a mortgage broker?

The first thing to remember is that these brokers are experts, and if you’re buying a house – especially for the first time – it’s a good idea to take advantage of all the advice available to you.

It’s also time-consuming to find the best deal so let a mortgage broker do the hard work on your behalf.

How to find a mortgage broker

• Ask friends and family – people may have a broker they have used before, who they can recommend
• If you have a good relationship with your estate agent and you trust them, you can ask them about their preferred brokers
• Search online. Price comparison websites and sites such as Unbiased can help you find a broker who suits your needs – for example, if you want someone local
• Once you think you’ve found your broker, check their credentials on the FCA website to make sure they’re legitimate

The benefits of using a mortgage broker:

• They’ll do all the legwork when it comes to comparing the market, and seeing all of the deals available
• They’ll check your finances, so they’ll intuitively know which mortgage will suit you best – even if you have other ideas
• They might be able to save you money and get you exclusive deals with lenders
• They can help with the ‘red tape’ side of things – for example, complex paperwork and contracts
• They’ll give you a clear picture of the total cost of the mortgage, not just the interest rate
• They’ll clearly explain your chosen mortgage’s features and any associated pros and cons – for example, the benefits and potential pitfalls of tracker mortgages.

The disadvantages of using a mortgage broker:

Provided you choose a legitimate mortgage broker, there are very few cons to using a mortgage broker – the only one worth mentioning is they charge a fee for their services.

We recommend using a mortgage broker for several reasons:

• If you are given a mortgage which turns out to be unsittable later on, you have more rights to make a complaint
• If you choose a mortgage by yourself, you could end up with the wrong mortgage, or be rejected by the lender you wanted as you didn’t fully understand the mortgage you chose.

Warning signs and things to look out for:

It’s rare to come across any issues, but watch out for:

• Brokers who try to get you to buy other services from them, such as home or car insurance
• Estate agents who say they can only deal with you if you use their ‘recommended’ broker – you’re not obligated to use your estate agent’s adviser
• Brokers who insist that you can’t work with more than one broker. Before you make a decision, you’re welcome to contact and work with as many brokers as you need to – by comparing different brokers you’ll hopefully find the best deal

Why do mortgage brokers charge fees?

Don’t be put off by the idea of paying fees – mortgage brokers are providing a valuable service and need to be paid in exchange for finding a great deal for you.

How they charge you depends on either the mortgage you’ve chosen or its value. You should be told upfront how much you’ll be charged, and if your broker will be paid any commission. Be wary of brokers who can’t tell you their fees, or who claim they can’t give you an exact figure until a deal is completed.

In recent years, no-fee brokers have started to emerge – these brokers won’t charge you for their services as they’ll earn a commission from the lender who’s providing the mortgage.