What Is the Role of a Mortgage Broker? – A Comprehensive Guide

Are you dreaming of owning your own home but feeling overwhelmed by the complex process of securing a mortgage? Look no further than a mortgage broker to guide you through this daunting task. While many of us may be familiar with the concept of a mortgage, the benefits of having a mortgage broker are often overlooked.

Many first time buyers don’t understand the simple question “what is the role of a mortgage broker?”. Some think that there is an additional fee that they have to pay for the services provided by a broker. However, this is not the case; instead, having a mortgage broker on your side can provide many benefits that will make the process of securing a mortgage much easier.

Whether you are searching for the first time or have had a mortgage before, you will know that the mortgage market offers a practically overwhelming choice of products. It is difficult to know where to start and to decide which mortgage is likely to most suit your particular needs, requirements, and circumstances.

It may be difficult making that choice, but it is essential to get it right. A mortgage is a long-term commitment and, if you get it wrong, you might be left with many years’ of grappling with an unsuitable product that is costing you considerable unnecessary expense.

In this article, we will answer the questions such as what does a mortgage broker do, why use a mortgage broker, how can a mortgage broker help me secure the best mortgage deal and many others.

Post Topics

What does a mortgage broker do?

Why use a mortgage broker?

Choosing your mortgage broker

The tools used by a mortgage broker

What will your broker charge?

What are the benefits of getting a mortgage adviser?

What are the limitations of having a mortgage broker?

Next Steps

FAQs

What does a mortgage broker do?

Mortgage broker helps the borrowers by providing advice on various mortgage products and helping to find the most suitable one.

A mortgage broker acts as a middleman between a borrower and a lender. They are qualified professionals with specialist knowledge of the mortgage market, who will research the whole market for you to ensure you get the best available deal to suit your needs. Your broker will take into account your existing circumstances and give you advice on the best type of mortgage, the most appropriate lender and the best terms.

Why use a mortgage broker?

The immediate appeal of using a mortgage broker may be in their saving you a considerable amount of time and stress, explained an article in Which? magazine in March 2020.

But it is in the way they make those savings that the broker’s professionalism comes to the fore. Working with your sole best interests in mind, the broker must be qualified to give mortgage advice to you. When they give that advice, they have an explicit duty of care to you and your financial interests – that is written into each mortgage broker’s authorisation and regulation by the Financial Conduct Authority (FCA).

If a broker recommends a particular mortgage product to you, he or she is obliged to explain and justify why that mortgage is the most suitable one for you – and if you subsequently discover that the advice was faulty in some way, you may complain to the Financial Ombudsman Service.

Choosing your mortgage broker

When choosing your mortgage broker, it is essential to recognise that different brokers offer different types of service – you need to establish the kind of broker with whom you are dealing.

The widest and most comprehensive level of service, for example, is likely to be given by a so-called “whole of market” broker. The whole of market refers to the fact that this type of broker deals with lenders throughout the mortgage market.

That differs from a mortgage broker who deals with a limited “panel” of approved lenders – and who recommends mortgage products from those lenders only. A mortgage adviser based in your bank or building society is going to have an even more restricted role in recommending to you only those mortgage products issued by his or her employers.

We have mentioned some mortgage deals that may be available only when dealing with a broker. Conversely, there are also some mortgage products described as direct-only mortgages – they are available only if you apply directly to the lender, without a broker acting as your intermediary.

You might want to establish whether your chosen broker will nevertheless recommend such direct-only mortgages if they offer a more suitable deal for you – bearing in mind that some brokers may decline to recommend such deals.

The tools used by a mortgage broker

Your mortgage broker will be looking to match your unique needs and circumstances to suitable mortgage products.

To do this, your broker needs an expert knowledge of the whole of the mortgage market and a keen grasp of the features likely to make one or more mortgage products suitable for your particular needs.

As an independent professional, your mortgage broker is likely to have access to specialist software that allows him or her to search mortgage deals more comprehensively than you could probably manage yourself – including those deals which lenders have chosen to make available only through brokers and not widely marketed across the whole of the sector.

One of the major goals of your broker will be to recommend suitable mortgage deals to you. When doing so, your broker will aim to have identified those lenders might likely to accept an application from you.

In helping to steer you away from those deals which you are unlikely to get, a broker safeguards against unnecessary rejections – which themselves might harm your credit rating  and, so, your eligibility for future deals.

What will your broker charge?

The majority of mortgage brokers make their living through the commissions they charge lenders for finding them customers.

Some lenders may also charge you a fee for their services – either as a percentage of the amount you are looking to borrow or as a flat-rate fee. If they aim to charge you, of course, they need to make crystal clear in advance the amount to be charged. You can read our article here for more information – What amount of fees do mortgage brokers charge?

What are the benefits of getting a mortgage adviser?

One of the major benefits of getting a mortgage adviser is that they can use their specialist software to help you find the most suitable mortgage product for your specific needs. They have access to deals which might not be available through other channels, such as direct-only mortgages. This means they can help you get a better rate and terms than you would otherwise have been able to secure.

A good mortgage adviser will also work with you to understand your financial objectives, and provide advice on how best to achieve them. They can explain the different features of each deal and give you an insight into any catches that might be associated with a particular product. Finally, they will be able to help you make sure that all documents are filled out correctly before submitting them to the lender.

Mortgage advisers are also well-versed in the regulations surrounding mortgages, and can offer advice on what products and features you need to watch out for. They can provide guidance on how to make sure that all documents are filled out correctly, as well as tips on how to boost your credit score. Furthermore, they can advise you on how to manage your finances responsibly so that you don ’t get into financial difficulty in the future.

What are the limitations of having a mortgage broker?

One of the limitations of having a mortgage broker is that they may not always be able to offer the most competitive rates. Some lenders may offer deals which are only accessible by brokers, but these might not necessarily be the best deals available in the market. It is also possible that your broker might not have access to special discounted rates which are only available through certain channels. Additionally, it is important to note that you may need to pay a fee for your broker’s services.

In addition, it is important to keep in mind that mortgage brokers are independent professionals and so they can only offer advice based on the products that they have access to. They will not be able to provide you with advice on any mortgages which are not available through their network – meaning you may miss out on a better deal. It is also possible that they may not be able to provide advice on the full range of mortgages available, as some lenders may only work with particular brokers or networks.

Next Steps

A mortgage broker has its pros and cons and so it may be worth shopping around to find the most suitable option for your specific needs. Bear in mind that you should always check the fees before signing up with any broker, as these can vary significantly from lender to lender. It is also important to make sure that you understand the terms of any deal before signing up, as these can have an impact on your future finances. 

FAQs

What should I expect from a mortgage lender when applying for a home loan?

When engaging with a mortgage lender, you should anticipate a thorough review of your credit report and financial history. The lender’s loan officer will assess your mortgage application to determine a suitable mortgage based on your credit score and the bank statement you provide.

How can an estate agent help me find the right mortgage deal?

An estate agent can often recommend a trusted mortgage adviser who has access to thousands of mortgage products in the mortgage market, ensuring you receive expert advice tailored to your home buying process.

What are the benefits of using an independent mortgage broker?

An independent mortgage broker can offer a wider range of products from the entire mortgage market, potentially securing an exclusive deal not available directly from a single lender. They operate with a duty of care to find the most suitable deal for your individual circumstances.

How does a mortgage adviser help with a mortgage application?

A mortgage adviser assists throughout the mortgage application process, leveraging their negotiation skills and relationships with lenders to advocate for your interests. They aim to secure a mortgage offer that aligns with your current circumstances, including your ability to make monthly repayments.

How can I ensure I choose a suitable mortgage when I have bad credit?

If you have bad credit, consult a financial adviser or a mortgage broker who specializes in such cases. They can conduct a credit checkA check of a borrower's credit history, which is used by mor..., review your credit history, and advise on products from financial institutions or credit unions that cater to potential borrowers with complex credit files.

What kind of mortgage loan would suit a first-time buyer?

First-time buyers should look for a mortgage loan with a fee structure that accommodates their status as a time buyer, with options for a range of mortgage products that allow for lower initial repayments or provide assistance through first-time buyer programs.

Can you explain the fee structure of mortgage broker fees?

Mortgage broker fees may vary, including a fixed price, an hourly rate, or a broker fee as a percentage of the loan. These fees should reflect the broker’s expertise in the mortgage industry and the depth of service provided, from initial mortgage advice to the finalisation of the mortgage agreement.

What types of mortgage should I consider from my mortgage provider?

Consider a variety of mortgage types, such as fixed-rate, variable rate, or interest-only mortgages. An experienced mortgage broker can explain the implications of each type and help you make an informed decision based on your long-term personal finance goals.

How can life insurance be integrated into my mortgage application process? When you’re going through the mortgage application process, a mortgage adviser can also guide you on life insurance policies, ensuring that your mortgage is protected and aligns with your overall financial planning.

Why is it important to have access to a wide range of mortgage products? Having access to a wide range of mortgage products allows potential borrowers to compare different mortgage terms, rates, and repayment charges to find the most suitable deal. A mortgage adviser with access to a variety of lenders can facilitate this comparison.

What are the benefits of developing a relationship with an independent mortgage broker over a market broker?

An independent mortgage broker often provides more personalized financial advice compared to a market broker tied to specific lenders. They prioritize your personal circumstances and have the communication skills to navigate the mortgage process effectively.

How does the range of mortgage products affect my mortgage rate?

The range of mortgage products available to you can significantly affect your mortgage rate. By comparing a wide variety of options, you can identify a suitable mortgage with the most favorable mortgage rate for your financial decision.

What is a ‘mortgage in principle’ and how does it fit into the home buying process?

A ‘mortgage in principle’ is a statement from a lender indicating how much they might lend you, based on an initial assessment of your financial situation. It’s a useful tool during the home buying process, demonstrating to sellers that you are a serious and capable buyer.

Can a mortgage adviser help if I’m looking to invest in the residential mortgage market?

Yes, a mortgage adviser can provide comprehensive advice if you’re considering the residential mortgage market, offering insights into the types of mortgage broker services that cater to investment properties and helping you understand the entire mortgage market.