First time buyers - broker or no broker is the question

SummerRainDrop

Afternoon

I would like to pick your brains on the topic “broker or no broker”.

My partner and I are thinking about our first home (in London/Surrey) and whether we should be using a mortgage broker or not.

Our situation is

- First time buyers
- Desired property budget is £170,000 - £200,000
We would like to put a £50,000 deposit and get mortgage for the rest
At our maximum budget that would be 25% deposit and 75% mortgage
- We have additional £5,000-£10,000 for fees and costs
- Income 1st applicant @ £20,000.00
- Income 2nd applicant @ 18,000.00 + £2,000.00 overtime
- No children
- No student/car/other loans and no overdrafts
- We have 3 credit cards, combined limit £2,500.00; we use about £200 a month and always pay the full balance
- Not sure if it matters, but the money for the deposit are currently in a family account overseas, the money are to be transferred to us and in a UK account in the near future

We are just getting into mortgages and have researched the topic, but not too extensively, we have obviously downloaded, printed and read the MSE PDF on the topic and read the MSE article on mortgage brokers.

From what we currently know/have read, which is not too much, there are pros and cons of using a broker.

PROS that we see

- Whole of market brokers “live and breathe” mortgages , can offer you deals from the whole market (duh) and would know which bank is more likely to give you a mortgage at good rates based on your current circumstances
- If the mortgage turns out to be not suitable for you needs/missold, you can complain to the Ombudsman

CONS

- Fees/commission
- We’ve read that people sometimes find a better deal online (it was a comment in a public forum, so don’t quote me on that one)
- We’ve read that our situation as first time buyers with 25% deposit is quite straight forward, so no need of a broker (again, it was a comment in a public forum, so don’t quote me on that one)

Any wise thoughts on the subject would be much appreciated by these 2 confused, excited and a bit scared first time buyers. :beer:

Dave_Ham

My biased opinion is that whilst yours is a straightforward ish situation, you are first time buyers.

Typically the process is daunting and given that Estate Agents lie and cause more problems than they solve, solicitors are too busy to give any level of service for the hand holding part of the process then many first time buyers lean on the Mortgage Broker.

That said, it is possible there will be better deals out there directly although maybe not at your income multiples if you buy at your top end.

Have another read through this and the house buying and selling section and get a flavour of the obstacles and take a view..

All the best

harvey115

Your point of view is correct in terms of the pros and cons.

The only thing sticking up from your circumstances is the use of deposit from your family. As some lenders do not like deposit amount in such manner and the added issue with the overseas account.

Other then that the case seems to be a straight forward one and should be able to achieve the required amount without problems (subject to credit history).

I would suggest you check a couple of direct lenders i.e. First Direct/HSBC, Co-op and Post Office. Also check with a broker and see what you can get.

Then go with the one you like and feel most comfortable.

PS - I would go for a fee free broker (who takes commission from the lender instead).

ACG

As Dave says though, estate agents are nightmares. Theyre lovely when your viewing the property as soon as you put an offer in and its accepted you then see their dark side.

If your in work during the day it can sometimes be difficult to speak to lenders during the day (this may or not be an issue for you).

Also just because you can get cheaper deals by going direct... are you sure you will find the cheaper deals without atleast speaking to a broker?

There is nothing wrong with going in with what you have found and seeing if the broker can beat it - i wouldnt have an issue with that, so long as the client was honest from the outset.

But as you are first time buyers, its a case of whether you are happy enough to go through with it or if you would prefer someone to effectively hold your hand and help with it or just do it all for you.

I might sound biased, but im not - i have nothing to lose or gain from this. I think most of what you have put is pretty much spot on, so its really just a case of narrowing down which route you take i suppose.

Conrad

Deffo DIY, no need for a broker at all. People find thier way accross the world, undertake degrees and challenges, so getting a mortgage imo is not all that daunting. No offence Dave Ham, I just think it isn't all that complicated for someone of average intelligence. You know my view is that brokers are really only needed for complex cases.

You will find many competetive direct only deals with the likes of HSBC, First Direct, The Co - Op, The Post Office and others.

Arrange your own life assurance with a broker as long as they do a commision rebate as this usually makes the premium even less than going direct to an insurer funnily enough. Only a small independant can offer these commision sacrifices.

Be mindful you just cant tell a lender any old thing as it could jepordise your chances, so for example you obviously don't say a parental gift is a loan or interest baring - common sense really.

Dave_Ham

Conrad wrote: »

Deffo DIY, no need for a broker at all. People find thier way accross the world, undertake degrees and challenges, so getting a mortgage imo is not all that daunting. No offence Dave Ham, I just think it isn't all that complicated for someone of average intelligence. You know my view is that brokers are really only needed for complex cases.

You will find many competetive direct only deals with the likes of HSBC, First Direct, The Co - Op, The Post Office and others.

Arrange your own life assurance with a broker as long as they do a commision rebate as this usually makes the premium even less than going direct to an insurer funnily enough. Only a small independant can offer these commision sacrifices.

Be mindful you just cant tell a lender any old thing as it could jepordise your chances, so for example you obviously don't say a parental gift is a loan or interest baring - common sense really.

Do be mindful that I said help with the entire process, rather than just achieving the mortgage. So yes this case is borderline, but with higher than average income multiples needed and a gifted deposit it is not necessarily a DIY case..

SummerRainDrop

Thank you all, very interesting thoughts, keep them coming:j

ACG wrote: »

As Dave says though, estate agents are nightmares. Theyre lovely when your viewing the property as soon as you put an offer in and its accepted you then see their dark side.

Can you please elaborate on this, if you don't mind.

I think my partner is quite happy "to do the work himself", I am the one who is quite emotional/sensitive and terrified of the responsibility and would most definitely prefer to have someone hold my hand.
The funny thing is, I have the option to work from home if needed and therefore would be available to talk during the day with whoever I need to talk to and he is more busy.

I really want/need to understand the obstacles/tasks that a mortgage broker helps you with.

So far I gather they talk with the lenders on your behalf? What about estate agents? I didn't think they would have any contact with them, but since you mentioned them... do they?

Dave_Ham wrote: »

Do be mindful that I said help with the entire process, rather than just achieving the mortgage.

What else can they help you with and what do you mean by "the entire process"? Thanks

Conrad

SummerRainDrop wrote: »

So far I gather they talk with the lenders on your behalf? What about estate agents? I didn't think they would have any contact with them, but since you mentioned them... do they?

The point is lenders have very robust systems designed to make sense to everyone. This is a requirement laid down by the FSA.

You simply phone a lender, apply, done. They then arrange the survey with the agent.

Millions of people inc FTB's apply direct.
A broker is there for more complex cases.

By all means use one if you wish, but first check out all the direct to lender deals - amybe call a lender and see how you find thier intial manner.

ACG

If my clients tell me the estate agent is on their case, i tell them to give the EA my number.
Im the process of buying my own house at the moment, ive had someone tell me "i HAVE to see their mortgage broker" - complete lie, they soon stopped when i told them i was a Mortgage Advisor.
Ive had another tell me i had the house all accepted, to then tell me ive not and its whoever gets the mortgage first - told them im pulling out and its still up for sale...just a way to get me to move quicker.
Another 1 or 2 issues and ive only visited 5 houses. Finally got one going through now and all is going smoothly. But estate agents can try to ride you like a horse to get it completed ASAP so they get their commission.

If your partner is comfortable doing it then thats fine. Just speak to the lender first, check they will accept gifted deposits and use their calculaors (dont just accept their "advisors" word for it, they have targets).

DannyboyMidlands

I went direct (with 1st Direct) and it was dead easy. Also about 75% LTV but with a lower salary multiple than your top end price.

There is hardly any work involved. Search the internet for a deal that suits, phone them up one evening, fill in a form, attach some bank statements. Job done.

I don't understand who all this daytime (or anytime) talking is gonna be with.

ACG

Lenders often query things and need to ask questions.