Buying your first house is complicated - there’s a load of jargon you’ve never heard of, a process you’ve not done before and a lot of potential issues to watch out for. A lot of first-time buyers don’t think they need to use a broker, but a good one is worth their weight in gold.
First, what's a mortgage broker?
A mortgage broker arranges a mortgage between you and a lender. They’ll work with you to find a product which meets your criteria and circumstances, then help you navigate the mortgage application. All brokers have what’s called a duty of care towards the customer (you!), meaning they have to be able to justify any recommendations they make.
Why should I go to a mortgage broker instead of directly to a bank?
On the face of it, going to a bank for your mortgage seems sensible, right? But banks don’t have access to all the products on the market (which the industry calls “whole of market” access). This could mean that there’s a better deal out there elsewhere that you’ll never discover.
What would a mortgage broker do?
An independent, whole of market broker will be able to use their industry knowledge and special tools to find you the best mortgage deal. Using a whole of market broker gives you a bigger pool of options, and because they’re not tied to any lender, you’ll get completely impartial advice.
They’ll usually start with a consultation to learn more about your situation, before finding deals for you and helping you through the lender’s application process.
How much would a mortgage broker cost me?
All brokers charge differently. According to The Money Advice Service, the average cost for a broker is around £500, but some are free. Before you formally appoint a broker, you should make sure you understand all the costs associated with using them. Here are some of the ways they could charge you, and what they actually mean for you:
- Fixed fee: you and the broker will agree a fee to find and arrange your mortgage. Make sure you get the fee in writing ahead of agreeing!
- Hourly rate: not hugely common in the industry, tbh. Some brokers charge by the hour - if they do, you should get a written estimate of how long it’ll take to arrange your mortgage, so you can budget for it
- Percentage: some brokers charge a percentage of your mortgage, for example a 1% fee on a £250,000 mortgage would cost you £2,500
- No fee: it’s important to know this means no fee for you. The broker will still receive commission, but it’ll be from the lender instead
What should I ask a potential mortgage broker?
- Are you whole of market? A whole of market broker will have access to products which aren’t available directly. They’ll be able to compare mortgages from multiple lenders to make sure you get a good deal.
- What are your fees? Understanding how much the broker will cost before signing any contracts is important, so you can factor it into the overall cost of buying your first home.
- What’s included in the service? You’ll want an understanding of how ‘hands on’ the broker is when it comes to chasing lenders for an update, or handling admin. Using someone who takes all of that on could save you a lot of time and stress.
- When are you available? Office hours only? Evenings? Weekends? It’s important to be sure you’ll be able to get hold of your broker at times which suit you.
How do I pick a good mortgage broker?
Start by asking around! A good recommendation goes a long way with such an important transaction. If you don’t know anyone who could recommend a broker, look online! Unbiased is a great way to find brokers in your area. You can also narrow your search by specialism, for example first-time buyer mortgages or buy-to-let mortgages. When you’ve got a shortlist, check their credentials. A broker should be fully qualified and regulated.
Ultimately, it’s a personal choice. The best way to find the right mortgage broker for you is to get out there and have conversations, until you find someone you click with and trust.