What does a Mortgage Broker do?

Mortgage brokers work on behalf of clients by sourcing relevant mortgage loans. The type of service a mortgage broker may offer depends on their jurisdiction. UK mortgage brokers are regulated by a governing body and can be held responsible for their recommendations on property finance and related advice. However, some brokers may limit their service to recommending appropriate lenders without giving any guidance at all.

Mortgage Brokers - Typical Tasks

• Mortgage brokers will generally assess the borrower in terms of their credit history and ability to afford mortgage payments.These assessments are usually based on a credit report and evidence of the client’s income.
• They will assess the market in order to choose the most suitable mortgage for their client and then make recommendations.
• Many mortgage brokers will explain the legal paperwork and related property finance.
• They will apply for a lenders agreement.
• They will ask clients to provide all the necessary documentation such as payslips and bank statements.
• Mortgage brokers will complete a lender’s application form, as well as submitting all the paperwork and evidence to the lender.

Property Advice Blog Top Tip!

Before you chose a Mortgage Broker investigate their liability clause in order to be sure of all services and responsibilities.

If your ready to proceed with a mortgage application and would like a no-obligation free quote from a fully licensed Mortgage Broker, complete the mortgage comparison form below right now to find out who can provide you with today's lowest possible rates.

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Mortgage Brokers - Recommended Questions

Before you decide on your mortgage broker think about how well you relate to them and whether you find their service informative and relevant. In addition there are three important questions to ask.

• Are you ‘whole of the market'?
• Are you also an independent financial adviser?
• Do you charge on a commission basis?

If a Mortgage Broker is whole of market it means that you will be offered a mortgage which has been chosen from a wide field. In this way you should be able to find the best deal for you which is available on the market. This is an important question to ask as some mortgage brokers only deal with a small selection of lenders because it is cheaper for them to do so. Property Advice Blog recommends ‘whole of market’ mortgage brokers for a thorough search and ultimately a better mortgage deal.

Are you also an Independent Financial Adviser?

You may find that you need the skills of an Independent Financial Adviser if you took out an endowment mortgage in the 1980s or 1990s. This type of ‘interest only’ mortgage which is paid into an endowment is designed to pay off the mortgage debt. However, many endowment mortgages fail to deliver as the investment is not adequate to repay the mortgage, and a large number of borrowers are not able to make up the shortfall. If you need property finance advice on dealing with a failing endowment mortgage you’ll find that a mortgage broker who is qualified as an Independent Financial Adviser is a worthwhile investment.

Do you charge on a commission basis?

Mortgage brokers typically gain income from two sources: commission and fees.

Commission

Many lenders pay mortgage brokers commission known as a ‘procuration fee'. This figure is generally around 0.25% to 0.5% of the mortgage's value and can extend to 1% depending on whether you have a poor credit rating. E.g. For a mortgage of £150,000, a mortgage broker would earn around £375 to £1,500.

Fees

Some mortgage brokers ask for a fee which can be charged at any time in the process.

Property Advice Blog Top Tops!

Make sure you know when a fee is expected and how much it will be before you sign up to a mortgage broker. In addition, avoid any broker who ask for more than a 1% fee and expects a payment before the mortgage deal is complete. Details can change at the last minute and you may find that you have overpaid your mortgage broker before the deal is set in stone.

Read on to discover Property Advice Blog's invaluable property finance advice before choosing your mortgage broker:

• Look for a regulated ‘whole of market’ fees –free broker who charges by commission and selects your mortgage deal from a wide variety of sources. In other words, don’t pay a fee unless you feel it is worthwhile in the long run.
• Consider a mortgage broker who asks for a fee which is refunded by a high rate of commission. If the fee is low and the commission is higher, then you could be paying less than expected. Ask your mortgage broker for a full run down of figures before you agree.
• Understand the meaning of the title ‘Independent Mortgage Broker’. If you choose an intermediary who describes himself as an Independent Mortgage Broker, they must offer you the option to pay fees only, as opposed to both commission and fees. What’s more, with an Independent Mortgage Broker all of the commission should be rebated to the client.
• Be aware that ‘whole of market’ fees-free brokers generally provide a similar service to Independent Mortgage Brokers, but are cheaper. Although ‘whole of market’ fees-free brokers work only on commission they will often offer the same type of property advice and information as the Independent Broker.
• Before choosing a mortgage broker ask them the three questions listed above and make sure you fully understand their policies and payment methods from the initial stages.