Is It Better To Go To A Broker Or Direct To The Bank When Remortgaging?
One of the most important decisions you will ever make in life will be which mortgage to take out to help you purchase a home, so you'll want to be certain that you are getting the best deal for your situation. There are many various types of mortgages on the market and most homebuyers are not aware of the entire spectrum of options and possibilities. With the housing market in its current decline and mortgages proving to be more difficult than usual to acquire, finding the best mortgage for you is a great challenge, and even more so if you have experienced financial difficulties in the past.
Finding the best mortgage can be time consuming, even using online mortgage calculators. You won't know if you are approved for a particular mortgage until you make an application, and being refused will affect your credit rating in a negative way.
Simply put, the mortgage broker's role is to find you the best deal. They are an impartial intermediary who acts as a middleman between the buyer and the lender. They usually have access to a wide network of lenders that offer a range of mortgages.
A broker should be regulated by the Financial Services Authority and should explain the mortgage system to you and help you with the decision of choosing the right kind of mortgage that suits your needs without bias to one particular lender. They should assess your personal circumstances and declare whether or not you will meet a lender's specific lending criteria before you make an application. This is because they will take your financial information and put your mortgage needs out to several lenders, who then return with their mortgage offers. The broker then feeds back all the details of the repayment terms, including the rate of interest, and the advantages and disadvantages of each to you. If none of these offers appeal, you have no obligation to accept any. When you find an acceptable offer, you then apply for the mortgage and start dealing with the lender, rather than the broker.
If you have had financial difficulties in the past, it will difficult to find a mortgage with a regular bank. A broker will search to find the lenders that do approve mortgages for people in your situation, even though they may be located in a different county or be unfamiliar by name.
If you choose not to use a broker, applying for more than one mortgage could affect your credit rating. The more often you apply for a loan, the lower your credit score becomes; lenders check your rating and see that you have already applied elsewhere so they may turn down your application. Using a broker to assess the market first before applying means you are more likely to be offered the mortgage you want.
Properly regulated mortgage brokers are very knowledgeable about the mortgage industry. They should be working with reputable lenders with whom they have previous experience and give sound advice on the myriad of terms and types of mortgages and interest rates available, from specialist mortgages and loans to capped, fixed and tracker interest rates etc.
Figuring out the true cost of a loan is crucial in today's market and a mortgage broker will be able to present you with these details. Another advantage of a mortgage broker that will appeal to those who abhor form filling is that they will manage the paperwork, which often makes the whole process more smooth and fast.
It's a good idea to check four things when considering whether to use a mortgage broker:
1. Do they search the whole of the market for the best deal? Some work with a limited panel of lenders, which restricts their offering.
2. Do you like and trust them? If your gut instinct says no, it is advisable to choose another.
3. What will they charge you? In usual circumstances the broker earns a fee from the lender according to the amount of the mortgage loan and therefore there is no charge to you. You could say that the lender pays the broker for the introduction of business to them. That said, however, some brokers also charge their clients a fee for their service – so they get paid twice. You may wish to take this into account before you ask for a particular broker's help.
4. Are they regulated by the FSA? If the answer is yes, they should be able to provide you with a number and you can check their membership is up to date on the FSA website. If there is anything not quite right, it is sensible to walk away.