One for the Brokers - mainstream offers

Elinore

Hello everyone.

We met with a broker recommended by a friend yesterday. Lovely person part of the opework network.

Pre meet we provided all our required financials. I will be admit to being a bit surprised as during the meet the products offered were pretty much inline with searches done on money supermarket.

Now, i didn't do these searches to second guess the Broker - my intentions were pure - This research was only to dip my toe in and get a general idea of what was going on and what we were looking at in broad strokes so i didn't have unrealistic expectations of what was about.

I kinda expected a slightly more advantageous rate via the Broker ( expecting a teeny bit off, i'll be honest)

To be fair to the Broker we are trying to keep our payments about the same'ish though i was hoping for a small reduction per month of £100 to the payment and plow the not inconsiderable equity we have accrued back in and whacking a huge chunk off the term. We have managed to take the term down, but ended up slightly more PCM. Solid figures haven't been provided yet.

Last time we used a online firm and they were... umm.... well they got us the mortgage at a good rate......... but the customer service, attention to detail and follow up was terrible.

So, to the question. would you expect your broker to offer the same as online mainstream direct to the public offers?

This is a respectul post, to any of the brokers that read this please don't be offended that i am questioning your co-worker. I just wanted to be sure after a poor experience previously.

(edit to say - good credit, no payment issues, no debt and £40K equity +over payments)

MrWB

I think you're probably missing the point of a broker?

They're there to offer more intimate knowledge of the market than you or I may have and experience from dealing with mortgages day in and day out, and help make the process easier and secure the right mortgage.

As long as they're whole of market, then they will use their experience to help match your cirucmstances to the best product for your circumstances. Yes, probably the biggest issue for most people is the interest rate... But there's other critieria of that needs to be matched to the property and the applicants too.

For example, if someone's got a bad credit history, they're not going to be suitable for a lot of mortgage products. Age, employment, affordability, property location, construction type, etc all come into it too.

Whilst brokers may have access to some mortgage products that you and I don't, those products may or may not be suitable for your circumstances. What a (good) broker does though is find, to their knowledge and experience, the best product they think you're suitable for.

You were expecting a better rate through a broker (you said "expecting a teeny bit off, i'll be honest") to save a "small reduction per month of £100"... I'd argue that £100 being small is relative to your circumstances - what you earn, the value you put on money, and the amount you're looking to borrow - but I wouldn't say that £100 saving is a small amount per month?

You'd need to either be borrowing a very large amount or need quite a large rate drop to save £100 a month on payments (as that would need to come out of the interest portion of your payments if dropping £100 per month based on rate alone?

I notice you said that you'd got "not inconsiderable equity" which suggests that you've probably got decent LTV and so you'd be looking at a lower rate anyway... Which means it becomes more difficult to drop £100 per month because it's unlikley to be able to take the rate down much?

If you apply for the wrong mortgage products that don't match your circumstances, you could end up with hard searches on your credit files and then get rejected, and that would affect your chances of getting mortgages with some other lenders for a while. By using a broker you reduce those risks.

Then brokers also make it easier when filling out the forms and paperwork, and getting additional information from you to the lender, and dealing with the underwriters on your behalf if needed. Often they build up professional relationships with lenders and underwriters too, so understand what specific lenders are concerned about and need to see in different circumstances, so increase the chance of getting past any roadblocks.

I'm not a broker - but have recently used one and we went from DIP on the Thursday, to full application on the Monday and full offer on the Thursday. One week in all - and this was for a purchase not a remortgage. Couldn't have been smoother from my perspective, and that was definitely down to using a broker.

They're not right for everyone, and if you have the time and ability, you can get a mortgage yourself without a broker. Using them is like using a professional in any industry - there's good and bad, but most have a lot more knowledge and experience than the rest of us and that can be advantageous in helping us get the right mortgage for our circumstances in the most straightforward way possible.

It's not all just about getting a lower rate than you might be able to get yourself. (That's not saying you shouldn't go for the lowest rate available to you, of course you should - but if there isn't a lower rate avaiable to match your circumstances, then you can't expect to get one by going to a broker?)

Good luck with the mortgage though!

Elinore

Fantastic post MrWB. Thank you!

And this is why I wanted to ask the question. I suppose as we are paying a two fees (broker fee and the arrangement fee) I was expecting to get more bang for my buck than if I just walked into a bank and they did it - for minimal costs to me.

This was one of the reasons for doing my search too - could I reduce our payments, get the rate I wanted and lower the term? Mainstream sites (who, to be fair are not au fait with our financial like the broker is) said this was possible. I suppose that’s the difference between the two.

The last time we used a broker I was expecting something along the level of service that you mentioned MrWB, but it was really rather painful and mistakes were made. I think its shook my faith a little.

Once again thank you, it’s always nice to get an alternate view.

getmore4less

Why bother reducing the term that just increases the contractual(committed) payment.

I kinda expected a slightly more advantageous rate via the Broker ( expecting a teeny bit off, i'll be honest)

To be fair to the Broker we are trying to keep our payments about the same'ish though i was hoping for a small reduction per month of £100

have you looked at what a small difference in rate makes?

With decent LTV(60%) and no affordability issues you can get the best rates(<2%) a marginally better rate would be 0.1% or 0.2%

for that to give a difference of £100pm on a 25 year term you would need to be borrowing in excess of £1m @ 0.2%

Elinore

We want to reduce the term as we were rather late to party buying a house. Our FTB mortgage they extended the term a bit to hit affordability criteria. As such we will still be paying out when we are about to claim our state pension. Which is fine for some people but it worries me that we will have affordability or health issues in later life that could make leaving things so late a bit of an issue.

So we want to reduce the term to bring us back down. Yes this keeps our payments static, but we will have wiped 10 years off (five as we reduced term and five as we have been paying off the mortgage during the five year fix) added to that the two year fix we just came out of and our over payments - Old age is hurtling towards us and we want to spend our prime earning years catching up on paying the mortgage down.

I should note if I only wanted to reduce the term by 4 years that would have given me the reduction £100 I mentioned.

I will put my hands up here, maybe I was expecting to have my cake and eat it!

MrWB

An alternative approach to meet your goals might be to go for the longer mortgage term that takes you up to retirement, or near it, and then overpay.

This means that you're suitable from an affordability standpoint for the widest number of mortgage products.

Then you overpay as you can affford to which brings down the term.

This also protects you should you hit a "life event" that causes your income to drop, etc.

Whilst you may have a limit of overpaying during a fixed term part of the mortgage (normally 10%, but is mortgage dependent), you can still save up and when you re-mortgage after a fixed term you can make a lump sum payment of your savings at that time. (Or look at an offset mortgage to take into account your savings.)

I hear you on the not wanting to pay your mortgage to retirement. We've been renting and we're buy8ing a house - I'm 37 and we were originally looking at a 30 year term and overpaying, but we dropped to a 25 year term - which actually I felt better about because I don't want to be paying off the mortgage up to almost 70...

That said, I don't want to be paying it when I'm 62 either, so overpayments are still on the cards. Really hope to be able to pay off the mortgage (ideally) before I'm 50.

Elinore

I am hoping to do the same - but I am quite a bit older than you


So less time to catch up.


We are over paying too and trying to also get some savings as we used all of them to meet the deposit and costs but not replenished them as we had a number of unexpected costs after we bought.


So all future pennies are being split three ways


general savings
overpayments
extra savings for the lump sum payment you mention