Know your options
When you’re looking to get a mortgage, you can go one of two ways. One route is through a mortgage adviser, also known as a mortgage broker, the second is direct with a lender of your choice, such a bank or building society.
Before making contact with a mortgage adviser or a lender, it’s worth getting an idea of what mortgage deals are out there. Price comparison sites are a good starting point, but remember to use more than one site and personalise the information for your property price and deposit. Also look out for "sponsored links" which may mean the best deals aren’t shown first.
The mortgage adviser route
A mortgage adviser, whether a mortgage broker or a financial adviser, will find the mortgage most suitable for you and take you through the application process.
The lender route
Approach a lender directly, and their representative will help you find the mortgage that’s best for you and help you submit your application.
Or if you’re confident about the type of mortgage you want, what you can afford, the term and the deal, you can sometimes choose not to receive any advice and do it yourself. This is called ‘execution only’ and involves applying online, without any interaction either face to face or on the phone with the lender. But since mortgages are such a big commitment and sometimes a minefield, it’s not really the route to go down – unless you’re absolutely sure you know what you’re doing.
Going through a mortgage adviser
Did you know that over 60% of mortgage loans are arranged through mortgage advisers? The reason they are so popular is because mortgage advisers not only give you guidance tailored to your circumstances, they also typically:
- Look at a range of mortgage lenders and products that could suit your needs
- Get access to exclusive deals that are not available direct with a lender
- Know the lenders and their lending criteria – and therefore can really speed up the process
In addition to all of the points above, mortgage advisers can also help with the application and all the necessary paperwork. What’s more, they offer a level of convenience – they may be available after hours and at weekends, some advisers are telephone-only, whereas some will even come to your house.
- Mortgage advice isn’t "free" – some advisers charge fees and all of them receive commission from lenders
- Some mortgage advisers only look at a limited range of lenders
- You may not have access to products and rates that are only available direct with the lender
- Some people may prefer dealing direct with the lender
What to ask a potential mortgage adviser
It can be tricky knowing what to look for in a potential adviser. The following questions should help you understand how to go about choosing one that’s right for you.
Are you limited in the range of mortgages or lenders you can recommend?
Some advisers look at available products from virtually all UK lenders, whereas others will only turn to a small number of lenders. So ask if the adviser is in any way limited in the range of mortgages they can recommend.
To make sure you’re getting access to the best deals, make sure the adviser gives you a full breakdown of their service and how they search for mortgages. In particular, ask if they search for mortgages that are only available direct with a lender.
Do you charge a fee?
Some advisers may charge a fee for their advice. The reason they do this is to help cover their time and administrative costs. If for some reason your mortgage application is unsuccessful, you may not get the adviser fee back. This fee is typically around £500.
All mortgage advisers receive commission from the lender. They’re obliged to tell you exactly what they’ll be paid before you apply and the level of commission won’t impact the service you’ll receive. Unless you’re arranging a buy-to-let mortgage, mortgage advisers have to be qualified and are regulated – see more below.
You needn’t worry about being sold the mortgage with the biggest commission - their advice will be focused on what’s best for your needs and circumstances.
Are you regulated?
You should only use a qualified mortgage adviser that’s regulated by the Financial Conduct Authority (FCA). This way, if you take mortgage advice and anything happens you have the right to complain to the Financial Ombudsman Service (FOS). You can double-check your adviser’s status on the Financial Services Register.
Going direct with a lender
Just like a mortgage adviser, a lender’s adviser needs to be qualified and isn’t allowed to recommend mortgages without assessing a customer first. Here are some of the benefits:
- They have to give you advice and recommend a product (although they will only choose from their own mortgage products)
- They typically won’t charge a fee for advice
- You can get exclusive deals not always available through mortgages advisers
Going directly with a lender means that you will only get access to their range of mortgages which may not always meet your needs and circumstances.