More FTB questions

sunflowers1

Hi,

Sorry if this is answered elsewhere, have tried looking but I'm still confused!

Could someone please explain what the difference is between getting a mortagage through a broker or going directly to a mortgage company? From looking on the net I think Natiowide looks good for a first time buyer but then someone told me you should always go through a broker, although they couldn't explain why!

Also, am I right in thinking that you have to have had a permanent job for 6 months before you can apply for a mortgage? I started my job in February as a temp and have now been employed on a permanent contract starting the 1st of July. Will this be acceptable as technically I was employed by the temping agency before?

Thank you!

MissMotivation

Basically a broker can give advice on any lender out there but if you go direct to a lender they will only advise on their own products. A broker can effectively "shop around" for you to make sure you get the best deal.

My advice is to speak to an independant financial adviser, just make sure that they don't charge you for the advice!!

lilyann1

Brokers can often get cheaper rates than advertised on the net and shops around for the best rates.
Make sure you don't pay for their services.We had one recommended by our EA and he was very good.
My husband had just changed jobs 1 month before we applied for our mortgage and it was fine.

F_T_Buyer

I'd be wary of which ever route you take. An IFA will usually only give advice on mortgages from their chosen panel, remember they are salesman and earn commission, so bear this in mind.

If I were getting a mortgage now, I would just search the net for the best product. One thing I would totally avoid is seeing the IFA of the EA where you buy a house from - they will know your maximum affordability, so this would determine whether your offer is accepted or not (it shouldn't happen, but it does).

sunflowers1

Thanks for the replies, makes more sense now especially if they sometimes have access to cheaper rates.

I think I'd confused myself before as I couldn't understand why anyone buying a house would want to pay more money than they had to by paying a broker. But then for a fee free broker I couldn't understand why banks etc would want to give them money unless they would recommend their mortgages. But still definately something to look into so thanks for the advice.

AndrewSmith

MissMotivation wrote:

Basically a broker can give advice on any lender out there but if you go direct to a lender they will only advise on their own products. A broker can effectively "shop around" for you to make sure you get the best deal.

My advice is to speak to an independant financial adviser, just make sure that they don't charge you for the advice!!

You mean Independant or whole of market mortgage broker. An Independant financial Advisor does not neccesarily deal in mortgages.

ukmonkey

ooh, one I can help with! See Andrew, I am learning!

To the OP - The mortgage broker shouldn't charge you a fee, as they will get commission from the mortgage company. Some will give you the option of paying the fee but you get the commission. Me and my OH are in the same situation as you albeit slightly further down the process, and we're going with a broker who is independent, whole of market, and who doesn't charge us a fee. He told us that we will be able to see how much commission he would get from the various deals, so we can satisfy ourselves that he isn't just trying to sell us whatever will make him the most commission.

They seem really good, totally transparent, hopefully it will stay that way!

Good luck!

AndrewSmith

F_T_Buyer wrote:

I'd be wary of which ever route you take. An IFA will usually only give advice on mortgages from their chosen panel, remember they are salesman and earn commission, so bear this in mind.

IFA's do not necessarily deal in mortgages.

Not every mortgage broker has a 'chosen panel'. I myself for example have full market access and no restrictions on where I can place a case. It is normally Estate Agency brokers that have panel restrictions due to the reciprocal head office business between the parent company and the lenders.

Yes we earn commission but then why shouldn't we? When we are assuming full responsibility for the advice given on products from a wide range of lenders and have to indemnify ourselves and the client accordingly. It all costs money. We are also a very profitable way for lenders to conduct business, which is why they are happy to pay the commission to us as it costs them less than doing the case themselves. As the commission is paid by the lender not the applicant why is it such an issue? Would the public prefer that we all stopped taking commission and charged an hourly rate as solicitors etc do? You would be shocked at how much work is involved and what the bill would be.

The average commission for a mortgage case is 0.3-0.4% of the loan which equates to £350 for a £150,000 mortgage. We also only get paid when the mortgage completes. Therefore it is in the interests of the broker to get you the best possible deal available to ensure he gets paid.

If I were getting a mortgage now, I would just search the net for the best product.

Your perogative of course, however you cannot then guarantee that you will have found the most suitable rate or product for you. Also brokers have access to exclusive intermediary only deals that are not available via the 'retail' channels.

http://forums.moneysavingexpert.com/showpost.html?p=2402946&postcount=13

This is just one example of why a broker is a good resource especially if they are not charging you a fee.

Remember also that we have to justify to the n'th degree every recommendation we make to both our own compliance watchdogs and the regulator FSA (before the bashers jump in saying about recommending based on commission levels).

One thing I would totally avoid is seeing the IFA of the EA where you buy a house from

This I agree with, but for the reason that the majority of EA brokers are limited to a panel of lenders, and usually have links to or are owned by either a lender or and insurance company.