How to shop about for a mortgage?Broker or bank direct?

misa.blue

What is the best way to get a good deal on a mortgage?
Is it worth seeing several different mortgage brokers/lenders to get a good deal?
Having seen 2 already they both give conflicting information but both offer a product at the end?
Are we better off just looking for the best rate we can directly through a lender(bank)?

holly_hobby

Were they both whole of market advisers ? In house mge advisers (bank, bsociety or estate agent) ?

Holly

kingstreet

I produced this for another thread a few weeks ago;-

In some cases, using an independent broker may be preferable to a whole market adviser.

Whole market advisers may only select from lenders and products which pay them a commission, while an independent may agree a fee with you and pay to you any commission he receives. Worth noting some whole of market brokers are paid commission and charge you a fee. National estate agency chains can often do this. If a direct to lender product is better for you, the independent will tell you if that is better as you are paying a fee for the advice.

Here's an example;-

you see a whole market broker looking for a 25 year repayment £150k mortgage on a £200k purchase. You want the best five year fix, regardless of fees. You agree the broker will take commission on any arranged mortgage.

He finds you an Accord Mortgages product at 4.44% fixed until 31/08/2016 at £828.65 per month. The broker will receive commission of £487.50.

You then see an independent broker who agrees to charge you a fee of £299 and to pay you any commission he receives on any arranged mortgage. He also looks at direct to lender deals and explains that in this case, you may get the best deal, but no commission rebate.

He finds you the Accord option, but as you have a fee agreement, he tells you the commission rebate would be £487.50, leaving you £188 better off.

The best overall deal is Yorkshire Building Society's 3.99% fix until 30/09/2016. The monthly payment is £790.93. This is a direct to lender product, so no commission rebate. You've paid a £299 fee, but in doing so, the monthly cost of your mortgage has fallen by £37.72 against the Accord option, saving you £2,263 over the five year fixed term.

I'm sure someone will point out that you can save £299 by finding the best direct deals yourself and that is true. If you have the time and inclination to do that, why bother with a broker at all?

HTH

m00m00

going direct can make sense if you have a spotless credit record, good employment history, and are comfortable doing your own research and working out the maths involved, having a a low LTV helps too.

if none of these are true, then seeing a broker is the best course of action.

misa.blue

Thank you ever so much guys!!! You have been great help!!!!

katsu

Also, get recommendations from people you know on a broker. Mine cost me £150 but the advice and informed support on mortgage choice etc was really valuable, and I think was well worth the £150.