Graham Lock, CEO of House Network
Research rates and reputable brokers
In the digital age, you can gain access to a variety of comparison websites such as moneysupermarket.com or comparethemarket.com, without the need for extensive credit checks, which would damage your hard-earned credit rating. If you come across specialist terminology, check out some of the ‘jargon busting’ information on sites like Money Saving Expert, or Which?
Speak to fully-regulated “whole of market” and “independent” brokers
Your next step is to speak with someone directly over the phone or in person, as the deal you’ve spotted online might not be the best available. We at House Network would advise to speak to someone completely independent, with access to the whole of the marketplace and completely fee free. Our best advice is to not approach anyone who solely deals with one or a small panel of lenders, as they will simply sell you what’s best for that company. Look for the award winners out there, and check out reviews via Trustpilot and other sites. Be aware of regulation via the Financial Conduct Authority – all mortgage lenders should be governed and regulated by this body – and every reputable lender worth their salt should proudly display this somewhere on their site.
Check your fees
Many brokers will offer their advice completely fee free, while others will charge you thousands for the privilege and bundle it up under the guise of an arrangement fee.
Arrangement fees are just another way of charging you for the privilege of taking out a mortgage, and there are now a number of brokers which waive these and have the lender pay for this instead. Make sure you have thoroughly researched your broker’s credentials beforehand, as you don’t want to be eating into that hard saved deposit before even taking the mortgage out.
Simon Checkley, director at Private Finance
Look out for charges
A broker will typically charge up to 1 per cent and will apply any lender commission to reduce the fee.
Brokers should add value by: offering access to better deals that you might not be able to find yourself, saving you time, actually being able to obtain the mortgage you want, removing as much of the hassle as possible from the application process, and advising on the most suitable structure (term, interest rate, eg. whether fixed, variable or mixed). Brokers earn their money, but they need to demonstrate why it is worthwhile paying a fee for their services in your case.
Check relevant experience
The mortgage market for first time buyers or home movers is completely different to that of higher earners looking for larger loans. You should ask your broker whether they have the necessary skills and experience.
Nadeen Hall, financial advisor at Capital Private Finance
Ask for qualifications
All brokers must be regulated and have passed their CeMAP exams (Certificate in Mortgage Advice and Practice). Some brokers may have Advanced CeMAP and this enables them to advise on lifetime mortgages that are catered for retired applicants. They also undertake regular file checks and annual exams to ensure they are compliant. However, their experience levels and knowledge will differ greatly depending on how many years they have been in the industry, their location in the UK and the intricacy of the cases encountered.
Go for the best deal
An independent broker will work on your behalf and not the estate agents or bank; so they will have your best interests at heart. They should have access to a wide range of lenders and should recommend the correct product based on your circumstances and not the remuneration received.
At your initial discussion whether that be by phone or face to face, a broker must introduce you to a regulatory document called ‘Keyfacts about our services’ also known as an IDD (Initial Disclosure Document). This is a document created by the FCA (Financial Conduct Authority) to ensure a broker explains what access they have to banks.
If you would like a broker who has access to as many lenders as possible, their IDD should state they have a comprehensive range or access to whole of market.
Some brokers work from a panel of lenders and this could be anything up to 20 banks whereas a whole of market broker may have access to as many as 80 banks.
The best quote I have heard with regards to this would be, “If you think it's expensive to hire a professional to do the job, wait until you hire an amateur”.