Getting a mortgage is one of life’s biggest financial decisions.
With thousands of products to choose from, many people wonder if using a mortgage broker could get them better rates.
The answer isn’t always simple – it depends on your situation but understanding how brokers work will help you make the right choice.
How Brokers Find Better Deals
There was a time when you needed to meet with your Bank Manager if you wanted a mortgage. Thankfully, borrowers now have a huge amount of choice, and Bank Managers are no longer required!
Recent figures show that broker arranged mortgages now account for about 70% of all new mortgages, so they’re becoming more important in the market.
Many smaller building societies and specialist lenders only work through brokers.
These lenders offer very competitive products but don’t advertise to the public. By going straight to your bank you’re excluding yourself from these options.
Think about that – you’re missing out on thousands of mortgage products before you even start looking.
Beyond just finding products, brokers have professional relationships with the lenders underwriting teams. I’ve seen countless cases where these relationships made the difference between approval and rejection.
A broker who works with specific lenders regularly knows exactly what documentation they need and how to present applications.
This expertise is particularly valuable when your situation doesn’t fit the standard lending criteria.
The Broker Advantage in Today’s Market
The last few years have seen big changes in mortgage lending.
Affordability checks are more strict than ever before. A single mistake on your application or applying to the wrong lender can harm your credit score and reduce your chances of being approved elsewhere.
Professional brokers are up to date with all the changes in lending criteria.
In 2023 UK lenders changed their lending criteria over 4,000 times. No individual borrower can keep track of these changes but brokers have to stay informed as part of their job. They know which lenders have tightened up and which have relaxed.
How Do Mortgage Brokers Work?
Most people know mortgage brokers find mortgages but few know what they actually do. Let me share some insights from my years in the mortgage industry about how brokers really work.
When you first contact a broker they need to spend time getting to know you, and your finances.
This goes way beyond just checking your income. They will look at your spending habits, check your credit profile and understand your property goals. This detailed assessment helps them work out which type of lenders will suit you the best.
Brokers need to spend a lot of time keeping up to date with the mortgage market. They monitor changes to lending criteria, new product releases and rate changes across thousands of mortgage products.
When working with a client they filter these options to create a shortlist of suitable products.
They will then spend some time speaking with the lenders, checking their criteria, and making sure they are a good fit for you. Good brokers know who to talk to at each lender to get answers fast.
It’s this step that increases the chances of success. Your broker is essentially pre-approving you, before you even make an application. The process is not perfect and the outcome can be improved by getting an Agreement in Principle with the best lender.
Read more: A Guide to Mortgage Brokers
When Brokers Make the Biggest Impact
Some situations benefit more from broker expertise.
Take self employed applicants – recent figures show only 67% of self employed mortgage applications are successful when made direct, compared to 89% through brokers.
Why?
Because brokers know which lenders take a more flexible approach to different income types and how to present accounts or tax returns.
Property type can also cause problems.
I recently worked with a client buying a flat above shops. Three direct applications had failed but we got approval in two weeks because we knew which lender would consider the property.
It’s the same with homes that need renovation or are non standard construction.
First time buyers see the biggest benefits from broker guidance.
Beyond rate comparison, brokers help you prepare your application from the start and get a 27% higher success rate than direct applications. They tell you exactly what documentation is required, spot potential issues early and guide you through each stage of the process.
This support is invaluable when you’re new to the mortgage market.
Related reading: How to get mortgage ready
The Cost-Benefit Balance
Mortgage brokers need to get paid for their services, let’s talk about broker fees honestly.
Some brokers work solely on lender commission and charge nothing to the borrower. Others charge fixed fees, usually between £300 and £999. Some charge fees as a percentage, usually between 0.3% and 1% of the loan amount.
These fees can seem big until you think about the savings.
A rate 0.5% lower on a £400,000 mortgage saves over £160 a month – that’s £4000 over 2 years. Plus avoiding failed applications protects your credit score. Brokers always disclose their fees upfront and explain exactly what services they include.
For many borrowers the benefit is more than purely financial.
- It can be the difference between being able to move house, or not.
- Being able to extend your home now that your family is growing, or not.
- Being able to buy a property large enough to accommodate an elderly parent, or not.
Brokers excel at problem solving. Thinking outside the box and understanding the nuances of lending criteria.
What Makes a Good Broker?
Mortgages are regulated, so all brokers must have the right qualifications and FCA authorisation.
But beyond that look for someone who asks you detailed questions about your situation. This can take a little while but it is important for them to understand who you are and what you need.
Good brokers want to know your long term plans not just your short term needs.
They should explain their recommendations and document why they recommend a particular product.
Look out for warning signs.
Brokers who push particular lenders without explaining why, won’t discuss fees openly or make guarantees about approval should raise red flags. Good brokers give you an honest assessment of your chances and explain any potential issues upfront.
Make sure you are dealing with a whole of market mortgage broker. Only these types of independent brokers can give you access to over 100 lenders, both large and small. Giving you maximum choice and a better mortgage deal.
Read more: What is a whole of market mortgage broker?
Preparing for Your Broker Meeting
Before you meet or speak with a broker, gather your documents: three months of bank statements, payslips and proof of identity.
Self employed? Have your accounts ready.
The more prepared you are the quicker the application can progress.
Think about your future plans too.
Moving again soon? Having a family?
These factors affect which mortgage products are best for you. Good brokers take these into account in their recommendations.
So What’s Your Decision
The mortgage market changes daily.
Professional brokers track these changes and know how they impact applications. This expertise plus whole of market access and dedicated support often gets better results than direct applications.
For many people, especially those with complicated circumstances or limited time to research, working with a broker is worth it financially and practically. The key is finding a qualified professional who knows your needs and can access all the suitable products.
Looking for mortgage guidance?
Contact us today to connect with an independent, qualified broker who can help find the right mortgage for your circumstances.
Frequently Asked Questions
You are free to deal with lenders directly. However, only a broker can offer access to over 100 lenders, and thousands of different deals.
Whole-market brokers can search across all available lenders. Some brokers work with a limited panel of lenders, while others represent just one provider.
Always ask about a broker’s market access before engaging their services.
While not guaranteed, brokers can secure better rates through access to more products and exclusive deals. They also help match you with lenders most likely to accept your application.
Yes. Brokers know which lenders consider applications that others might reject. They can often find alternative options and help present your case more effectively.
Read more: What to do if your mortgage is declined
Absolutely. They understand how different lenders assess self-employed income and know which ones offer the most flexible terms.
Related reading: Can I get a mortgage if I’m self-employed?
No. Brokers can check your eligibility without affecting your credit score. They also help avoid multiple failed applications which could harm your rating.
They manage the mortgage application process, chasing the lender to get your application approved. After that they can also assist with legal queries and problems with the property chain.
Read more: What does a mortgage broker do?
No. Many brokers now work entirely by phone, video and email, though face-to-face meetings are available if preferred.
