What does a mortgage broker do?
Searching for your own mortgage is very time-consuming and can also be quite confusing. While some people are happy to do this themselves, others recognise the advantages of using a mortgage broker.
It may be that you are thinking about using a mortgage broker but are unsure whether this is the right decision, or you need to learn a little bit more about what they do.
Or you need some suggestions on how to find a good one! This guide will explain what a mortgage broker does and how this can benefit you.
What is a mortgage broker?
A mortgage broker is someone who is trained to find the best mortgage for your circumstances and then help you to apply for it.
An independent, or whole of market, mortgage broker will have access to around 100 different lenders and thousands of mortgage deals. It’s their job to learn about you, what you can afford, what you need and then find the right solution.
By using an independent adviser you will have access to many more lenders than you would by doing your own research. There’s lots of lenders that only work with brokers and others that provide exclusive rates which are only available to brokers.
Before a mortgage broker can give you advice they need to obtain a professional mortgage qualification and then be registered with the Financial Conduct Authority (FCA). The FCA is the official body that oversees mortgage brokers and financial services companies in the UK.
What do they do?
At a very basic level a mortgage broker’s job is to find you a mortgage.
But of course there is a lot more to it…
Mortgage brokers are trained to help their clients by learning about their mortgage needs, finding a good solution and then helping to get this set up. The sections below should give you an idea about what a mortgage broker does and the different ways in which they can help you.
Learn about you
The first thing a mortgage adviser needs to do is learn about you, your finances and what you hope to achieve in relation to a new mortgage. They don’t want to guess and suggest possible mortgage options for someone similar you.
Any recommendation must be tailored to you.
Initially this will involve them asking you lots of questions, to build up a picture of your income and employment, credit status, experience and mortgage affordability.
They will want to know about how much flexibility you need in a mortgage, what your plans may be over the next few years and what the new mortgage will do for you.
While most mortgages are used to buy the home you live in, many others are to buy investment properties, raise money to start a business, pay off expensive debts or to buy out an ex-partner.
The adviser needs to understand all of these facts and nuances so they can help you to achieve your goal.
Advise and educate
While it’s not the advisers aim to make you a mortgage expert, they will want to explain certain aspects to make sure that you understand and are happy with your choices.
Remember that most mortgages are for several thousands of pounds, so it’s important that you have a good idea about what’s happening and why.
For some of the choices you will need to be guided by the adviser. They will have the experience to know which options would work best for you and the ones that should be avoided.
Don’t worry about asking your mortgage adviser lots of questions. Even the silly ones! They will be happy to answer them and to explain why they have suggested a certain course of action.
Problem solve
Lots of borrowers will contact a broker because they know they have a problem, or an issue, that would cause difficulty when applying for a mortgage.
It could also be something that a high street lender has rejected as they don’t offer that type of mortgage or facility.
Luckily, mortgage brokers are excellent problem solvers.
There’s generally a solution for most mortgage circumstances. It’s the brokers role to find a way to that solution. Sometimes this is a simple as approaching a specialist lender and hey presto!
Other times it could be asking you to make some changes to improve your mortgage suitability.
This could be because your deposit is not quite enough for the type of property you wish to buy, or that you have a thin credit file, or maybe your self-employed accounts need to be brought up to date.
Being able to identify these types of issues way before you apply for a mortgage, means that you stand a much better chance of being approved for a mortgage and it’s likely to be on better terms as well.
Research your options
Once the adviser has sufficient information they can begin the task of researching and finding you a mortgage.
For residential mortgages and buy to let mortgages a great deal of time can be saved by using specialist software to sift through the various deals.
Your adviser will be looking to match the mortgage type you have asked for with the most appropriate lender. This isn’t as simple as finding the cheapest interest rate. Your broker needs to check whether you qualify for this mortgage and if you ‘fit’ the lenders criteria.
Brokers will assess the likelihood of your mortgage application being accepted with certain lenders. By avoiding the ones you could be rejected by saves both time and money.
Equally the amount of time a lender is taking to process mortgage applications could influence your decision.
If you are in a purchase chain and need to receive your mortgage offer quickly, your broker will be suggesting lenders that have the speed and capacity to meet your deadline.
For more specialist loans such as holiday let mortgages or bridging loans the research phase is a little different.
This often relies on the brokers experience and knowledge of these lenders to identify your best options. A lot of phone calls will be involved and the adviser may even need to speak directly to a mortgage underwriter to talk over your case and seek their approval.
Apply for the mortgage
Once the broker has settled on one or two mortgage deals that they can recommend they will send you a mortgage quote, or key facts illustration. This sets out the fees and monthly mortgage payments for a specific scheme.
Then it’s time to apply for the mortgage.
Sometimes this can be done online but some types of mortgage still requires a form to be printed and filled out.
In addition to the form the broker will request a list of other items that are needed. These could include; proof of address and ID, proof of income, proof of deposit and property details.
Once all of the items have been received and checked your application will be submitted to the lender for processing.
This is the time to consider taking out life cover to protect the mortgage. It’s not compulsory to have life cover but you can protect your family for very little cost.
Monitor the progress
During this underwriting and processing phase your mortgage broker and their admin team will be keeping an eye on the progress and addressing any issues that may arise.
Some of these they may be able to fix without troubling you, but others may require you to provide additional information.
The lender will be undertaking credit searches, looking at your credit score, making affordability checks and asking a valuer to visit the property.
They will continue to monitor the progress, working closely with the lender, and taking the burden away from you.
Obtain the mortgage offer
This is the point where your mortgage application turns into a mortgage offer, the official written approval of how much you can borrow and on what terms.
Once you have your mortgage offer, it’s usually valid for three to six months.
Your mortgage broker will check over the mortgage offer to make sure it is correct and matches what you have both agreed to.
Their job at this point is mainly done.
They will, of course, be very happy to answer any further questions or step in to help you if appropriate before the mortgage starts.
What information will they ask for?
Your mortgage broker will need you to provide certain documents to verify your identity, address and income.
Most people are likely to need:
- Proof of identity (passport or driving licence)
- Proof of address (your most recent utility bill)
- Bank statements for the last three months
- Payslips for the last three months
- Most recent P60
- Your last two years of self-employed accounts
- Last two years of SA302
Shareholding company directors will also need to provide company accounts which should show dividends and retained profits.
Your mortgage adviser needs to establish your mortgage affordability and will need to analyse your bank statements for this purpose. The last three months are usually sufficient but some may ask for six months.
If you have online banking then you can usually print your statements at home or email them to your broker. You may be a little nervous about allowing a broker to snoop around your bank statements. There’s no need to be worried, your information will be kept confidential.
Just remember that your broker is on your side!
CONTACT A MORTGAGE BROKER
If you are ready to take the next step then we can put you in touch with a fully qualified independent mortgage broker.
What are the benefits of using a broker?
Choice – If you use an independent mortgage broker they will have access to over 100 different lenders and banks, giving you the maximum possible choice.
Time – Finding and applying for a mortgage takes longer than you think. With a broker assisting you the main burden of finding a loan and dealing with the lender is removed.
Advice – Only by using a qualified broker can you benefit from their years of knowledge and experience. The advice will not just relate to the mortgage but to your own finances, the deposit and perhaps any future plans you may have concerning the property.
Mortgage Calculators
Get started with our free and easy to use mortgage calculators.
What about going direct?
There’s no obligation for you to use a mortgage broker and so you may wish to apply directly with a lender.
Obviously this will mean conducting all of your own research and seeing which lenders offer the best rates.
With no broker fee to pay this could seem like the cheaper option. However, there’s no way of knowing that the deal you have found is the best, or the cheapest or that you will be approved by the lender.
By going direct you may be paying over the odds for many years to come.
FAQ
Frequently Asked Questions
Do mortgage brokers charge a fee?
In many cases a mortgage broker will charge you a fee for arranging your mortgage. Read more.
How do I find a mortgage broker?
We can help you find an award winning independent mortgage broker. Learn more.
How much is a £500,000 mortgage per month?
Monthly payments do vary but at 3.5% interest the payments are approx £2500 pm. Learn more.
How does a mortgage broker get paid?
A mortgage broker will receive commission from mortgage lenders and fee income from clients.
Do I have to meet a mortgage broker?
No, this will be for you to decide. In person meetings are available but most people prefer telephone calls or video calls.
Are all mortgage advisors regulated?
All mortgage advisors working in the UK must be authorised and regulated by the Financial Conduct Authority.
