How to choose a mortgage broker

Martin Stephens/PA

Just when mortgages started to seem more available, uncertainty in the Eurozone is forcing many banks to tighten up their finance and get picky about who they lend to once again.

For borrowers this means wising up to the mortgage market to find the best deal to suit your circumstances has never been more important. If the prospect is daunting, how about turning to a mortgage broker? Here's all you need to know before employing the services of a mortgage adviser.

How independent?
Many mortgage brokers pitch themselves as independent but it is important to find out just how independent they are. A 'whole of market' broker means they'll do just that – compare the entire market to find the best deal – while others may only select from a restricted panel of lenders. These brokers are often referred to as 'tied' brokers and tend to be the in-house advisors at most highstreet banks. Visit unbiased.co.uk to find a truly independent advisor in your local area.

Added protection
Providing you choose a broker that is regulated by the Financial Services Authority, you will be protected should any problems arise – a benefit not available if you purchase a loan direct from a lender without advice.

When you receive mortgage advice, your mortgage broker has a duty of care to you and must justify why the mortgage they recommend is suitable for you. If their advice is not up to scratch you can complain and be compensated.

Level of service
It is important ask your broker what level of service they will provide and what they offer that you cannot do yourself. Brokers should know the mortgage industry inside out, which will make for a smoother, faster and professional service than if you shopped around yourself and purchased direct from a lender.

When you've chosen a mortgage, the adviser will make an application to the lender on your behalf. Once accepted, the adviser will usually liaise with the solicitors, estate agents, and lenders on your behalf – right up until you exchange contracts on the property and finally complete your purchase.

Navigate the fee maze
Comparing mortgage deals is tricky thanks to the myriad of fees that make it difficult to find out the true cost of a mortgage and make a fair comparison across the market. A good broker can help you to find the best deal on the market when all these additional costs are included, which can save a lot of time and effort.

Time is often of the essence when choosing a mortgage and a broker can use their experience of lenders' background criteria when advising you and processing your application to avoid unnecessary delays.

Fees versus commission
Specialist mortgage advice is a valuable service and therefore comes at cost. Brokers earn their crust through either a one-off fee paid by you; commission paid by the lender to the broker for sending business their way – or a combination of both.

There is no right or wrong payment option, and it comes down to personal preference. While choosing a commission based advisor means there is no charge to you, some borrowers prefer to pay a fee to ensure brokers are not swayed by the level of commission certain lenders may pay. Every broker should be upfront about whether they receive commission from products they recommend.
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