by Mark Johnston
When looking for a new home many of us head straight for the estate agents. We know that whilst they may have a bad reputation most are professional, trustworthy and provide a great service when buying a new home. Estate agents have been keen to fill the gap in income that the struggling housing market has creased by offering other services like surveying and mortgage advice but borrower should beware!
Don’t be talked into allow your estate agent to find your mortgage as well as your house. Most mortgage brokers who are tied into an estate agent earn between 0.25% and 0.5% of the value of your mortgage in commission so the rewards are substantial. Many industry insiders are unconvinced that these brokers always find the best deal for their customers. Some have even raised concerns that a few brokers advise on unsuitable or expensive mortgage deals just because they get paid higher commission on them.
Homebuyers are free to use whoever they want when looking for a mortgage. Some estate agents may try and suggest that any mortgages must be arranged through themselves but this is simply not the case. If your estate agent tries to persuade you to take out a mortgage with them against your better judgement or try and tell you that you may loose the opportunity to buy the property if you do not sign up with their mortgage broker then you can report them to either the National Association of Estate Agents or the Property Ombudsmen.
If you do use your estate agents to find a mortgage remember that they would know all about your financial position and some agencies have used this knowledge to push up the asking prices knowing that you may be able to afford a little more.
Remember that mortgage brokers are looking to make money based on the mortgage advice they provide and this can be very costly at times. Some charge up to 2% of your mortgage especially if you have a complicated credit history. A 2% fee is £2,000 for every £100,000 you may wish to borrow.
Not all brokers search the whole market, many just look at a small proportion of the mortgages offered in the UK market. Don’t assume that the deals that a mortgage broker offers are the best and that there are no others out there. As every, the best advice is to shop around. Speak to friends and family and if you do decide that using a mortgage broker is for you ask questions and check what’s been offered against what’s in the market. The best thing you can do is stay up to date with mortgage news and offers by visiting mortgagerates.org.uk. We bring you the most up to date news and deals and try and give our readers a clear, easy to understand and independent view on what’s happening in the UK market.
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