How to Choose a Mortgage Broker for Your New Home
You have decided to take the first steps on your journey to home ownership. However, navigating the wealth of new lending laws is a daunting prospect. In 2014, the Financial Conduct Authority (FCA) created a new system of vetting potential home buyers, the mortgage market review (MMR). Consequently, there has been a sharp uptick of mortgage seekers who have chosen a mortgage broker to guide them through the home loan process.
If you decide to use the services of a mortgage broker to get you a good deal on a new home loan or refinance, you need to be prepared. Not all mortgage brokers are the same, and there are some important considerations to keep in mind. Arm yourself with the knowledge required to choose a mortgage broker who will work for you, getting you a good rate and appropriate terms for your next mortgage.
Pick a Mortgage Broker Who Is Whole of Market
When deciding upon a mortgage broker, look for the key phrase “whole of market”, also sometimes listed as “fully independent”. These brokers have not made any exclusivity deals with any banks or building societies, and will look at almost all of the available mortgage deals to choose the best mortgage rates for your personal circumstances. The only exception to this rule is that some banks have direct deals that are not available via mortgage brokers, so you will still have some legwork to do on your own if you are not pleased with the mortgage terms your broker has offered.
Find Out What Fees the Mortgage Broker Charges
There are three methods that mortgage brokers use to make their money: a flat, one-time fee from you, a fee based off of a percentage of your mortgage value, or a fee charged directly to the lender. Ask the mortgage broker to explain their fees upfront, so there won’t be any unexpected costs later on in the process.
Ask For Recommendations from Recent Home Buyers
If you know someone who has recently bought a new home or refinanced an existing mortgage, ask them about their experience with their mortgage broker. If you don’t know anyone personally, look up reviews of mortgage brokers on independent websites. When comparing potential mortgage brokers, make sure they are listed on the Financial Services Register, which confirms that the mortgage broker is authorised to provide you with financial products and services.
Determine if the Broker Knows the Financial Market
A good mortgage broker will do more than look at the numbers and offer you the lowest lending rates available. They will be knowledgeable about the state of the lending industry, and will know which banks are swamped with lending applications, and which deals will save you more money over the long term. Your mortgage broker is obligated to give you the best loan options possible, so don’t let their lack of industry knowledge handicap your mortgage loan.
Choose a Broker Who Will Listen to Your Concerns
You know the state of your personal finances better than anyone, and a worthwhile mortgage broker will take the time to listen to your circumstances and worries. If you are self-employed or have an unstable work history, you will be more concerned about making your mortgage payments every month than, for example, a salaried CEO. Your mortgage broker will help you choose the right lender for your situation, as well as financial services such as insurance in case of illness, death, or job loss.
Select the Broker Who Makes the Application Process Easier
You want a mortgage broker who is actually helping you with the lending application process, not making it more difficult or giving you unwarranted concerns. The broker should be completely familiar with all of the necessary paperwork and documentation involved, and should be comfortable explaining every step of the mortgage process to you. Any reluctance to keep you informed of the status of your loan application should lead you to reconsidering your choice in mortgage brokers.
Above all, a mortgage broker should streamline the lending process, giving you the best possible experience when obtaining your home loan or refinance. Once the process is complete, you will be free to enjoy your new home, and not worry about whether or not the terms of your home loan are suitable for you. By choosing the right mortgage broker, you will have a smoother lending experience that you can recommend to others.