When looking for a mortgage you may be faced with a decision as to whether you should use the services of a mortgage broker instead of applying for a home loan directly with a lender.
One of the main reasons why you should use a mortgage broker is that they have access to a much wider range of products than an individual lender does. Mortgage advisors who work within bank branches are tied to the products that the bank offers and cannot advise on products offered by other financial institutions. This means that tied advisors are not able to offer advice on the entire mortgage market and are therefore not independent and unbiased.
Instead those mortgage brokers are usually limited to about a dozen products, usually with varying interest rates, loan-to-value ratios, and fees. Apart from the variances in these factors, the products are mostly the same.
They will usually require the applicant to pass the same set of criteria, such as credit worthiness, in order to assess whether they are eligible for a loan. This normally means that applicants with adverse credit will not be approved and the lender will not assist them in locating a more suitable product.
Independent mortgage brokers, on the other hand, may have access to thousands of products from dozens of different lenders. This will certainly increase the odds of you finding a product to suit your individual circumstances, particularly if you are self-employed or do not have a perfect credit history.
An independent mortgage broker will have access to software that will be able to scour the entire UK mortgage market to find the best product available to suit your individual needs.
Many niche lenders specialize in providing mortgages for people who do not qualify for the products offered by mainstream lenders and they usually prefer to conduct their business through independent mortgage brokers. This means that you will not be able to access certain lenders without using the services of a mortgage broker.
Some larger mortgage brokers are even able to offer exclusive and semi-exclusive deals. These mortgages are not available on the open market which means it is always a good idea to contact at least one major mortgage broker to find out what they have to offer. Exclusive deals are usually only available for a limited time and target certain borrowers.
However if you are eligible for a prime mortgage product you may be able to secure the best deal directly from a lender. If you apply for a mortgage with a mainstream lender you will be able to save on mortgage broker fees as you will effectively cut out the middle man. Ordinarily you will be required to have a perfect credit file and some equity in your home or a large deposit.
Therefore, if you are looking to buy a home and need a mortgage, or if you are looking to remortgage a property you already own, you will need to asses the two options carefully and make a decision based upon your personal financial needs.
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