Mortgage broker guide
A mortgage broker could help you on your journey towards homeownership. But what is a mortgage broker? And what should you consider when choosing a mortgage broker?
What is a mortgage broker?
Mortgage brokers, also known as advisers and intermediaries, are regulated experts who'll assess your options and help guide you through the process of getting a mortgage. They're qualified to compare the best deals across the market, from a range of lenders, to get one that suits you.
Trussle is a mortgage broker
Trussle is an online mortgage broker. That means we can give you mortgage advice and help you find the best mortgage deal for your personal circumstances.
Unlike most brokers, Trussle is completely free. We will never charge you a penny for expert mortgage advice or for arranging a mortgage with a lender.
Should I use a mortgage broker?
As you’ll be advised by a qualified industry expert, getting a mortgage with a broker should make the process a lot easier.
Brokers will help ensure your application is completed to a high standard so that you have a better chance at being accepted by a lender.
In most cases we would recommend using a broker rather than walking into your local bank branch, whether that’s Trussle or another company that you trust.
Different kinds of mortgage brokers
Not all brokers are created equal.
Some prefer dealing face-to-face, others favour operating over the phone, while online brokers like Trussle champion being able to deal with much of the mortgage application journey online.
Some are large firms that employ hundreds of advisers, while you can also get one-or two-man bands.
Smaller firms could argue they provide a more ‘personal’ and face-to-face approach.
Larger firms may have access to more sophisticated technology to smoothen the application process, though this isn’t always the case.
Whole of market and limited panels
Some brokers have access to more lenders than others.
Brokers described as ‘whole of market’ or ‘independent’ may cover more of the market than a broker with a ‘limited’ lender panel.
If the panel is limited it means they refer business to a select number of lenders
It may be worth asking how many lenders your chosen broker has access to before committing to using their services.
It should be noted, however, that some smaller or newly-launched mortgage lenders only offer their mortgages through some brokerages, so it’s difficult for any broker to cover 100% of the market.
How much do mortgage brokers charge?
Some mortgage brokers charge you a fee to use their services, though others, including us at Trussle, are fee-free.
If you use a broker that charges a fee, you can expect to pay between £300 and £500 for a normal residential mortgage.
All mortgage brokers and advisers get paid a ‘procuration fee’ by the lender or building society when they successfully arrange a mortgage for you. This is how fee-free brokers make money without charging you a penny.
The fee is made up of a small percentage of the loan amount.
Choosing a broker
There are a few approaches you can take when locating and selecting a broker.
You can research the big name broker firms that pop up when you search for ‘mortgage brokers’.
You can use search engines to find broker firms in your area, while some companies provide tools that enable you to find local advisers.
Brokers may advertise online or offline, in local newspapers, magazines or on TV.
You may find an adviser through word of mouth, which is what some one-man band brokers rely upon.
A good way to check whether they are reputable and trustworthy is to look at the reviews left by their customers. Many of our customers reviews are on Trustpilot, for example.
Developers or estate agents may refer you to a broker. We’d recommend doing your homework on the recommended firm before agreeing to use them.
Not all brokers satisfy customers
Applying for a mortgage can involve a great deal of paperwork and back and forth when using a traditional broker or lender.
We found that a lot of customers haven’t always had a positive experience when taking out a mortgage in this way.
In 2018 we surveyed 2,000 people and found that:
40% of homeowners recall their previous mortgage experience negatively.
Two in five homeowners found the mortgage experience stressful.
One in five said the vast amount of paperwork needed for their initial application caused the most stress.
15% blamed the industry’s widespread use of jargon for adding stress.
As online brokers do everything digitally, it could reduce a great deal of stress knowing you can go through the mortgage journey from the comfort of your own home.
Traditional mortgage brokers vs. online mortgage brokers
Online mortgage brokers enable you to access your account any time of day.
Sometimes the same can be said of some major brokerages with sophisticated systems.
One-man band brokers are sometimes willing to meet you at unusual times of the day or evening, though they can’t be available round the clock.
One area where technology-based mortgage brokerages have an edge is when you’re looking to remortgage.
Trussle is able to monitor the market and notify you when it would make sense to switch to another deal.
This can come in handy when you come to the end of your current deal.
Our algorithm will tell you if it makes sense to switch despite paying early repayment charges, as it could be a better choice long term to change your mortgage deal long before your current one expires.
Monitoring the market in this way isn’t something traditional brokers tend to be capable of.
Online advisers tend to use chatbots, online forms, or apps, plus phone calls if that’s your preference.
This can be perfect for some but others prefer a face-to-face experience, so it depends on what you’re comfortable with.
With both models you would need to submit some paperwork, but this can be done online and an adviser can help you with the application process.
Frequently asked questions (FAQs)
Do mortgage brokers do credit checks?
Mortgage brokers don’t directly handle credit checks.
You can check the status of your credit rating for free using major agencies like Experian, Equifax, and TransUnion.
Lenders will conduct a credit check when you apply for a mortgage.
This can be a ‘soft check’, which doesn’t affect your credit score if you are turned down, or a ‘hard check’ which could.
As a general rule, you shouldn’t apply for multiple mortgages (or loans or credit cards at the same time. Multiple credit applications, particularly if they’re rejected, can make you appear desperate, which could harm your ability to get a mortgage in the future.
Can a mortgage broker get a better deal?
In many cases, yes. Brokers are able to compare what’s available across the market and are better placed to get deals through quickly and smoothly.
Going straight to a lender could be quicker in some cases, though you won’t benefit from having someone compare and contrast deals from across a variety of lenders.
Some lenders’ deals are intermediary access only, meaning you can only get a mortgage with them via a broker. This also means that brokers may be able to secure customers exclusive deals with these lenders.
Getting a mortgage isn’t something most of us do multiple times, but good brokers are familiar with the most competitive products at any given time and are aware of which lender may best suit you.
Who regulates mortgage brokers?
Mortgage brokers are regulated by the Financial Conduct Authority (FCA). They can be directly authorised or act as agents of another regulated firm.
They have to take a qualification accredited with the regulator to give you mortgage advice.
Should I use my estate agent’s broker?
There’s no right or wrong answer, but it’s important to remember that it’s completely up to you which broker you use.
Do you like them?
You’re likely to be in contact with your mortgage adviser a fair amount. It’s therefore important you trust them to find you the right deal, and if you like and trust the adviser recommended by the estate agent, it could be a good option.
Have you looked around at mortgage deals?
Before you commit to using your estate agent’s in-house mortgage broker, it’s a good idea to have a look around to familiarise yourself with the deals available.
It’s also important to consider that some brokers are tied to a few lenders, which means they can’t search the whole market. A broker who looks at the whole market is likely to find you the most suitable deal.
Do they charge a fee?
If the in-house broker charges a fee, look elsewhere. Many mortgage brokers are fee-free, and instead receive a small percentage of the mortgage amount from the lender rather than charging the customer.
Is their service good?
Sometimes you could find that an independent broker gives you a better service than the broker your estate agent recommends. This isn’t true in all cases, but as independent brokers rely on word of mouth for recommendations, it’s in their interests to deliver on service. If the in-house broker is getting constant business from an estate agent regardless of your recommendation, you might be viewed more as a means to an end.
Reading online reviews will give you an unbiased indication of the type of service you can expect - Trustpilot is a good place to start.
Are they looking after your best interests?
Remember that as the estate agent is working in the interests of the seller, there could be a conflict of interest. A mortgage broker should have your best interests at heart, so if you feel like you’re being pressured into a deal to move things forward quickly and keep the seller happy, look elsewhere.
The most important things to consider when choosing your mortgage broker are their fees, whether they search the whole of the market to find you the most suitable deal, and your personal preferences. You’ll be in regular contact with your adviser, so it’s worth choosing someone you get on with.
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Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
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