Mortgage Brokers

Consulting an independent mortgage broker is essential for any aspiring homeowner who wishes to acquire the most appropriate and best priced mortgage. There are thousands of mortgage products and a profuse and confusing range on the open market. Choosing a loan with the right terms and conditions and one that meets a particular property buyer’s requirements is a challenge in itself, but given the complexity of percentage-based and term-dependent add-on fees, trying to find one that is competitively priced is even harder. First time buyers often perceive the task more akin to looking for a needle in a haystack.

This is where a good broker can be worth their weight in gold, because they are able to sift through the chaff and find the best product at the best price. But not all mortgage brokers are the same and it is therefore important to differentiate between mere intermediaries and those brokers that access and advise on the entire mortgage market.

Intermediaries are often restricted to a select handful of lenders and their products. These brokers receive a commission from these lenders for acquiring customers (borrowers), even though the products they are promoting may not necessarily be the best available on the market. Independent brokers are paid either by a lender’s commission or by the borrower through a mortgage broker fee, but importantly they have access to the entire market product range and therefore can suggest and arrange the best property loan according to price and conditions.

It is crucial that potential borrowers approach brokers forearmed with this knowledge and ask at the outset whether the agent or advisor they are talking to searches the entire market or a mere selection of the mortgages that are available.

The recent financial crisis and property crash also created an interesting phenomenon whereby brokers were pushed aside by some lenders, simply because product profits became so tight they could not afford to pay them the usual broker commission. This meant that, in some cases, the best-priced products were only available through a lender’s high street outlet. The lesson to be learned here is that while a good broker should always be approached to sift through the range of products available, it is equally important to consult high-street banks and building societies too – and then assess which mortgage is the best from all the information acquired.

Brokers are often even more invaluable to those looking for an adverse finance mortgage, a self-build mortgage or a commercial mortgage. The products available for these particular types of loan are much more restricted and, in some circumstances, the only mortgages available are through specifically appointed brokers. Equally important, the terms and conditions and repayment schedules of these mortgages are often more complex – an experienced and knowledgeable broker will be able to explain and advise about fees and conditions, whereas the average borrower might easily become lost in the style of jargon used or the complexity of fees and repayment schedules mentioned.

Many believe the Internet has been of great benefit to would-be homeowners looking for financial support when purchasing property. The advent of the online mortgage, where people can acquire a loan at the click of a mouse, has certainly made the task easier and faster – but not necessarily safer! While the Internet is a useful and invaluable resource for searching for information about mortgage products and to acquire price structures, terms and conditions and so forth, it is not always advisable to secure a loan through it without first undertaking exhaustive security investigations.

While many online lenders are undoubtedly genuine, even though their names might be unfamiliar – the Internet is bulging at the seams with scammers and fraudsters intent on stealing your money and/or your identity and bank and credit-card details. This means it is usually safer to deal with known and recognisable lenders and to arrange and secure financial transactions in the traditional way by post or face-to-face through high-street outlets.

The Association of Mortgage Brokers is a useful starting point for anyone trying to find a reliable and trustworthy independent broker to help identify the best and most appropriate property loan from the entire mortgage market. Their members deal with 400 lenders and search 22,000 different deals. More information is available through their website at www.aoima.co.uk or by writing to them at The AOIMA, Glebe House, 4 Higher Stubbin, Nether Haugh, Rotherham. S62 7RY.

TONY BOOTH MNAEA is the author of The Buy-To-Let Manual, The Beginner's Guide to Property Investment, How To Build Your Own Home and How To Be Your Own Estate Agent.