Should I use a mortgage broker?

Lets face it finding the right mortgage is not easy. The vast number of mortgage options available, and conflicting views about the future of UK interest rates mean the task is harder then ever before. Borrowers often need advice, but the question is where to turn and who should they trust.

Traditionally those seeking a mortgage would turn to their own Bank or Building Society, and for many borrowers this is still the first point of call. There is a small advantage in dealing with your own Bank or Building Society, as they will work hard to retain your business. Most lenders offer a number of different mortgage products but how does the borrower know whether the product they are being offered is competitive.

Borrowers prepared to put in the time researching the entire mortgage market will find the process time consuming and often confusing. Fortunately the task has been made easier by a growing number of comparison websites. These websites are a great resource but most do not offer any advice.

A growing number of people in the UK are turning to Mortgage Brokers who are able to research the mortgage market on their client’s behalf. The broker will recommend the most suitable mortgage and deal with the application from start to finish. Although the concept of a mortgage broker is a good one, the level of service will vary considerably:

Whole of Market Mortgage Brokers:
This type of broker will look at the whole mortgage market to find the most suitable mortgage for their client. Brokers may charge a fee for their service but if you look hard enough you will find firms working on a whole of market basis without charging a brokerage fee; a good example of a none fee charging UK mortgage brokerage would be Smaart Associates.

Tied Mortgage Brokers:
Tied mortgage brokers will research the mortgage market but from a limited number of lenders.

Non Advice Brokers:
These brokers will ask you questions about your mortgage requirements and will then present a number of options for you to choose from.

So is using a mortgage broker a good idea? Well yes, it usually is, especially if the borrower has a limited knowledge of the mortgage market or the mortgage requirement is complicated. Whether to pay for advice is very much a personal choice, both fee and non-fee charging brokers may be researching the same mortgage products and this might lead to the same mortgage being recommended.

All UK lenders and mortgage advisers need to be regulated by the Financial Services Authority (FSA). Mortgage Brokers are professionally qualified and you should check to ensure that they have the appropriate qualifications

Article by: Lee Dawkins 01-11-2007

The articles on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of Smaart Associates Limited. All comments and opinions are made in good faith, and neither Smaart Associates Limited nor the author will accept liability for them.