So working as a mortgage broker we help a huge range of clients, from first-time buyers to portfolio landlords to families upsizing and so on.
This allows me to look at ways we assist our clients and tailor our service to each client’s individual needs. This got me thinking about all the clients that do not use brokers, which has then led me to write this article.
There is probably three ways in this day and age to obtain a mortgage. Option 1 – go to your bank, option 2 – research yourself online and then go direct to that specific lender and option 3 – use a broker.
Option 1 – A lot of the time your bank will say no, through no fault of your own. Banks have specific criteria to go by and if you do not fit in their box then they will not lend the money. (This is the reason I left the bank, I got bored of saying no).
Option 2 – Yes this works in theory, but when you get down to the application you may have the same issue as option 1. Each bank and lender has their specific criteria, they will offer headline rates but a majority of people will not be eligible for them. This could be a very timely process for anyone to manage.
Option 3 – First of all normally the biggest issue clients normally have by using a broker is the fee that the broker will charge. Now in relative to a property transaction, these fees are very minimal, so let’s say for arguments sake it is £500 to put the mortgage into action. What would a client get for this money?
1. They would get access to most available mortgage products in the market. I just did a quick search on a property value of 500,000 and a mortgage of 300,000 for a two year product mortgage, and there is currently 1235 different products available. How would somebody possibly differentiate between these products on their own. A broker will find the cheapest deal that fits the clients criteria.
2. They would get a meeting on their own terms, e.g. weekend, evening or whenever and wherever they want to be seen. Making this extremely convenient for the client.
3. They would get a full understanding of all fees involved and potentially be able to avoid these. (such as legal fees & valuations). Potentially saving the client money by using a lender that has free legal work & free valuations.
4. The broker understands each banks criteria, which is a huge part of the process. Most lending is initially done based on criteria. An individual trying to find their own mortgage when a niche criteria is needed could take them months.
5. The brokers professional understanding of the whole market and what a client actually needs. A broker also has access to products that the general public do not get access to. There are specific lenders that only work with mortgage brokers for compliance reasons.
6. The mortgage broker works on your side. You both have a mutual goal and you both work together to get the mutual goal approved.
7. A mortgage broker knows the property market and can help you negotiate the right price.
There is a lot more that a broker does for their client through a mortgage transaction but I do not want to bore everyone. So lets say a £500 fee is a small price to pay when potentially it could save you money on your interest rate, save you money on other fees, save you time, allow access to product not available to the public and make your life so much easier throughout the process of the application, whilst giving you a product that is completely tailored to you.
Your mortgage will be a majority of people’s largest commitment in their entire life, so it seems extremely strange to me why a person does not want to take professional advice going through the process. I would urge everybody that has property or looking to buy a property to speak with a broker and even get a sense check of their current situation. This could be a small price to pay for potentially such a large gain.
If you have any questions as always contact me at email@example.com