Mortgages

Mortgage Brokers Explained

What is a mortgage broker and why use one.

A mortgage broker is a person or company that can arrange a mortgage between you (the borrower) and a mortgage lender. They'll work with you directly to help you decide what kind of mortgage you need, and then find a deal that matches your criteria - whether you are a first time buyer or looking to remortgage your current home.

A mortgage broker can help navigate you through every stage of finding and applying for a mortgage - to get the best deal available based on your circumstances.

For example, their services may include:

Helping you assess your financial situation.
Suggest the most suitable mortgage for your needs.
Searching the market to find deals that match your criteria.

Mortgage brokers in the UK are authorised and regulated by the Financial Conduct Authority (FCA).

What can a mortgage broker help you with?

A mortgage broker can assist you in finding the best mortgage arrangement as a buyer. This entails receiving the ideal sum, with enticing conditions, and the best interest rates available. They offer personalised guidance based on your particular financial and personal circumstances, ensuring that you have the best chance possible of obtaining a mortgage for your new residence. Additionally, a mortgage broker like Plan and Prosper will guide you through the challenging mortgage application procedure at no cost to you!

Why might you want to use a mortgage broker?

In theory, you might approach a bank directly and request an offer. There might be a far better bargain with a different bank out there, so it's tough to know if that deal is the best you can get without researching the market. An all-encompassing mortgage broker, like Plan & Prosper, will be able to show you all of your options.

Additionally, some mortgage lenders only work with brokers, so employing a broker as opposed to going it alone could help you get a far better mortgage offer that saves you money.

A mortgage broker will be able to provide you with personalised advise about what to do, which lenders are more suitable, and which papers you'll need if you're worried that you might not be qualified for a mortgage, for example because of your work status or credit rating.

How much do mortgage brokers charge?

Let's get this out of the way: Plan & Prosper is 100% free. We collect our fee from the lender, not you.

Not every mortgage broker is free, though. Some mortgage brokers want to bill you on an hourly basis. Some charge a flat fee, often split into two parts - the first when you start working with them, and the final when you sign your mortgage agreement with the lender. The average cost of a mortgage advisor in the UK would typically be around £300 but it can be lots more.

All mortgage brokers get a commission from the lender once your mortgage is approved and signed for, in exchange for sending a new customer their way. This commission is usually between 0.3% and 0.5% of the mortgage value, and it's the same amount for all brokers.

Brokers should always be upfront and transparent about how much they charge, but if you're unsure about anything, it's best to ask before you sign any paperwork.

What questions should you ask a mortgage broker?

Mortgage experts are a fantastic source of information and advice for everything related to mortgages, but also the home-buying process.

You can ask mortgage brokers all sorts of things.

What documents should I gather in advance of a mortgage application?
How can I increase my chances of being eligible for a mortgage?
What are the best mortgage options for first-time buyers?
Which is better for me: a shorter fixed-period, or a longer one?
When is the best time to remortgage in the future?
How can I get a mortgage if I'm not a UK resident or citizen?
What will a solicitor or conveyancer do, and how

Can mortgage brokers offer loans directly?

The best mortgage deals from banks, building societies, and other lenders will typically be found with the assistance of a mortgage broker. The majority of mortgage brokers can't give you a loan directly; instead, their role is to match you with the appropriate lender.

Can a mortgage broker always find the best deals?

It depends if your mortgage broker is whole of market. Some mortgage brokers only work with certain lenders, or specialise in certain types of mortgages, so have a more limited range of deals to offer you.

Often, yes, a mortgage broker will find you the best mortgage deal. However, sometimes, a bank will offer a special-rate mortgage to it's existing customers, which wouldn't be available through a broker. It is always worth asking your bank about any special-rate mortgages they might have as well as speaking to a broker.

Either way, using a mortgage broker (especially when it's free, like Plan & Prosper) gives you much better context for making a decision. There is a higher chance that a mortgage broker will uncover a deal that you've perhaps never seen, and one which beats anything on the market.

What are your rights when using a mortgage broker?

Firstly, everyone has the right to use any mortgage broker they like. Even if your estate agent recommends a specific broker, you don't have to choose them if you don't want to. In fact, going with your estate agents broker could be an expensive mistake.

Because mortgage brokers work in a regulated industry, you're well protected by the law. If they offer you advice that turns out to be false or badly suited to your personal situation, you can go to the Financial Ombudsman to file a complaint and resolve it.

It is also important to remember that your mortgage is offered to you by a lender, not the mortgage broker. You should review the terms and conditions of the mortgage offer with your broker, and preferably, with another legal professional such as a solicitor.