Use a broker or straight to big banks?

wisedave

Hello,

My wife and I are first time buyers and looking for 10% down mortgages. We both have perfect credit and an income to support the price range of house we are looking for.

Is it best to go to a mortgage broker or one of the big banks when looking for the best deal on a mortgage?

Are there additional fees when going to a broker that we would be responsible for? How do brokers get paid?

If I am missing something, just let me know!

Thanks!

Dave

ACG

Some brokers charge a fee and rebate commission (independent)
Some brokers get paid commission (whole of market and tied/multi tied)
Some brokers charge a fee and get commission (whole or market and tied/multi tied).

As for what your best doing, it depends entirely on yourself.

A broker can do a search and find the best rate - whether that be with the big banks or smaller lenders not on the high street. They will also do the leg work for you and help guide you through the process.

If your happy doing the leg work yourself and the research or just going to a bank then you dont really need a broker.

Based on what you have said, there is nothing to say you need a broker, but a good one could save you time, money and a lot of headaches - some people see that as wroth paying for, others dont.

wisedave

Thanks for the advice!

I don't mind doing some homework but it is truly advantageous to have somebody there to know what they are doing and explain things along the way.

I have to think that a broker (is advisor synonymous?) will help with pitfalls and avoiding them. What do I need to look out for or ask for when engaging with a broker?

Cheers,

Dave

ACG

Advisor/Broker = same thing.

To be honest like with any walks of life you will get brokers who are lazy or a bit useless. As it could be a potentially stressful time, i would just see what theyre like at coming back to you whether they are proactive (without being pushy) and whether you generally feel like you trust them and can get on for the next 2-3 months.

As one of your first questions was regarding how we get paid etc then its worth agreeing this and ensuring your completely happy with their fee charging structure (dont forget, free doesnt always mean best) you get what you pay for, but at the same time you dont want to be paying a fortune for what should be a relatively straight forward application.

General questions i get asked are:
- My fee,
- Time scales (how long to complete),
- How much the mortgage will be (although i can never answer that until having done a factfind, i can usually give a ball park figure at best),
- When we can meet up.
- Yesterday i was asked if i worked for halifax (literally the first question!) - no idea why, we hadnt even discussed products... as long as you dont ask that you wont seem too unusual :-P

But ask what you like, theyre being paid to help you so make sure your happy.

wisedave

Thanks for the help and efforts!

ACG

oh, and ask whether they are independent, whole of market, tied or multi tied.

Whole of market/independent will open you up to the most deals so i would stick to one of those personally.

PierremontQuaker03

Personally if its a straight forward residential mortgage I wouldn't bother going to a broker, you can find best buys from surfing the web and newspaper money sections.
I have just used a mortgage broker for the first time, because I am remortgaging, and going for a residential and BTL mortgage - a little bit more complicated than normal so I thought I would go to a broker.

Better_Days

Even if you do use a broker, I would still advise you to check that what s/he advises is the best deal.

Decide if you want a fixed variable or tracker rate and the mortgage term. Bit of crystal ball time as you have to judge what you think will happen to interest rates. At the moment the govt seems hell bent on propping up the housing market as a vote grabbing strategy, so I can't see interest rates going up in the short term (famous last words!!) However, after May 2015 the landscape may be very different, which is why I have gone for a 5 year fixed rate.

Set up a spreadsheet and compare the costs and terms and conditions. At the very least you need to know the arrangement fee, booking fee, valuation fee, closure fee, overpayment fee, early redemption penalty, if the mortgage is portable, APR and the amount repaid for every £1 borrowed. Some offer you £250 towards solicitors fees. Do you have to take out any insurances through the mortgage provider?

Some are only available if you have a current account with the provider. I have gone for a 5 year fixed rate and the product I eventually chose didn't look cheapest initially, but when I had done all the sums it was no more expensive than a variable rate mortgage offered through a broker. But I was able to get the fixed rate because I already had a current account with the provider.

Also check how long the mortgage offer is available for when you are approved. In my case the funds have been reserved for 6 months. Just as well as two purchases have fallen through and we are now on our third.

Getting a mortgage is a massive financial commitment. It is really worth doing the work to eductate yourself so you can make an informed decision and so you don't get any nasty surprises in a couple of years on. Finally, bear in mind that taking out a mortgage is one of those decisions for which you wont know for a while if you jumped the right way.......