Should I use a Mortgage Broker?

daveshow

Cheers Gaz.

I'm afraid I already agreed to an AIP is this a bad thing? I was assured that there is no obligation and thought it could do no harm! Thats got me worried now.

JimmyTheWig

daveshow wrote: »

Do you mind if I ask one more thing? How exactly is an advisor able to get you a better rate? And would the difference be % rate?

Sometimes there are deals only available to brokers.
More often, however, there are deals only available if you go direct.
So it's unlikely that a broker could get you a better deal than you _could_ get yourself.

But I think Dave's point was that a broker would search the market while you are looking at one lender.
Lets say you wanted to buy a loaf of bread. You suggest going to Waitrose. Dave suggests getting someone to find out where the cheapest bread is. I'm pretty sure that Dave's suggestion will find you somewhere cheaper than Waitrose. I don't think that Dave's guy could get you a better price for bread from Waitrose, but he could find a cheaper shop.

JimmyTheWig

As to using an Estate Agent's broker, I'm not quite as against them as many people are.

They will be restricted to specific lenders and specific products. But if it is easiest for you to have a chat with them than with an independent broker then as long as you're not paying for the chat and you understand there may be better deals out there than the one they suggest it might be worthwhile.

This is assuming that you know what you are doing in terms of researching deals yourself. If not then you need proper advice.


But I do agree I'd be wary of letting the estate agents know how much I could afford to pay for a property. May be best to see a broker in a different estate agent?

Dave_Ham

JimmyTheWig wrote: »

Sometimes there are deals only available to brokers.
More often, however, there are deals only available if you go direct.
So it's unlikely that a broker could get you a better deal than you _could_ get yourself.

But I think Dave's point was that a broker would search the market while you are looking at one lender.
Lets say you wanted to buy a loaf of bread. You suggest going to Waitrose. Dave suggests getting someone to find out where the cheapest bread is. I'm pretty sure that Dave's suggestion will find you somewhere cheaper than Waitrose. I don't think that Dave's guy could get you a better price for bread from Waitrose, but he could find a cheaper shop.

Yeah - cheers this is certainly similar to where I was going, although technically I could get the bread cheaper also..

So - firstly you need to understand the difference.

So a fee free mortgage broker would offer the best deals out there from banks who pay the introducer a commission. You pay nothing to the advisor, they get you a decent rate, hold your hand (if you like that sort of thing) deal with the estate agents (no mean feat) and solicitors.

An independent would charge you a fee, say £595 and then search the entire marketplace and calculate the best deal for your circumstances. They would check elgibility, fees, cost etc. and you pay for their advice, rather than just inputting and managing the application.

Say you took the 5 year deal with Nationwide, I would estimate that depending upon loan size you could save yourself at the very least £1,000 over the term going elsewhere...

Typically, an independent will refund any commission back from the lender to you if it is a commission paying deal.

Hope this helps..

Nationwide are ok by the way, just not market leading on rates.

JimmyTheWig

Dave_Ham wrote: »

although technically I could get the bread cheaper also.

Is this because of

An independent would charge you a fee, say £595
...
Typically, an independent will refund any commission back from the lender to you if it is a commission paying deal.

?

I.e. if the commission is more than, say, £595 it would be cheaper going through an independent. But if the commission was less than, say, £595 it would be cheaper to do it yourself / use a fee-free broker?

Would the likes of me and the OP be able to find out the commission on the mortgage that we decide to go for?

daveshow

Ah right its becoming a lot clearer now! I better get shopping around!:money:

Dave_Ham

JimmyTheWig wrote: »

Is this because of

?

I.e. if the commission is more than, say, £595 it would be cheaper going through an independent. But if the commission was less than, say, £595 it would be cheaper to do it yourself / use a fee-free broker?

Would the likes of me and the OP be able to find out the commission on the mortgage that we decide to go for?

Commission is always, always declared on any KFI (Key Facts Illustration) so yes for sure.

Not necessarily as you put it, as a fee free broker may find a deal at say 3.99% with a £995 fixed for 2 years product/lender fee and may cost £18,702 over a 2 year term

If an independent would find a 3.29% with a £495 fee fixed for 2 years the total cost over a 2 year term may cost £15,083.

Therefore the "bread" is cheaper and may be worth engaging someone.

It is easier in the lower loan to value sections though...


Good luck