by Mark Johnston
Firstly a mortgage broker is an intermediary whose job is to match individual’s requirements with the most suitable mortgage product and secure it at its most competitive price. Brokers are fully regulated and authorised by the Financial Services Authority (FSA). They give ‘full advice’ meaning they search the market and advice on which product they believe is right for your circumstances. Lenders however work on a non-advised basis meaning they can give you lots of information on products but can not provide advice about your particular situation.
At the height of the property market in 2007 brokers sold as many as 7 in 10 of all mortgages and lenders offered them better rates than they were prepared to lend to customers directly. So historically getting a mortgage direct from the lender was never as competitive. However, the craziness of the financial world over the last few years shook up the market and now direct products have become just as competitive.
Choosing a mortgage has always been fraught, but in recent years the market has exploded. Gone are the days when the major decision was whether to take a variable or fixed rate deal.
There are many ways to access financial products and sometimes the easiest route is to open an account direct with the provider. Most of us are comfortable doing this with simple and straight forward accounts with out advice.
Although some borrowers want a bit more reassurance when it comes to arranging the biggest financial commitment of their lives.
If this is the case then a mortgage broker is the way forward. A broker will scour the market for the right deal, searching through product ranges of many lenders, including some ‘broker only’ lenders that consumers cannot access directly. Brokers have an in-depth knowledge of lenders criteria and therefore they know that sometimes a deal that looks good on paper may only be available to a select few borrowers.
A mortgage application will almost certainly go through more quickly with a broker. Brokers have the experience of working with the lenders and know how to ‘package’ an application so it goes through first time with no delays due to missing information.
Due to the credit crunch the mortgage market has changed dramatically over the past few years. Going to a broker is a useful part of the process, but it defiantly should not be seen as the route to guaranteeing the ‘best’ deal. Some lenders are now keeping back their best deals from brokers and reserving them for customers who come to them direct, in order to avoid paying commission to a broker.
The deals these lenders offer direct can often be more competitive than those offered through brokers, thus making the process of finding a decent mortgage much more difficult than it use to be.
The key question is whether borrowers have the time and resources to find the best deal on the market and whether they will be able to ensure the application is processed before the deal is with drawn.
Experts recommend using a broker in addition to doing your own research. This would practically guarantee the best chance of finding the most competi
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