I’m often asked why use a mortgage broker when I can go online or talk to my bank? In this week’s blog, I explain why a good mortgage adviser is more than simply finding the best mortgage for you.

It was very nice having a few days of late summer last week. Even more so, getting some peace and quiet with the kids back at the school was a real joy!

So this looks to be living now. Most of us are getting into a new way of working, the majority of us still spending most of our time at home but with an increased office presence. We actually had everyone in, the office at the same time, for the first time since last March… It is so strange to consider this the norm considering where we were pre-lockdown. But like everything life throws at you, it is your ability to adapt that will determine how successful you ultimately are. 

So with a return to normality, comes some thoughts about the core parts of our business. None are more important than looking at the role a broker plays, which I have picked out in detail below:

The cost of bad advice

Research from Unbiased.co.uk showed that the cost of not getting quality independent financial advice costs the average person £14,920. 

From our perspective, that is easy to see why, but if you are not familiar with the mortgage market and don’t know how to get the best mortgage rates, I thought it was time to look at why to use a mortgage broker and the benefits of working with a mortgage adviser.

  1. Access to products
    • 80%+ mortgages via brokers. Even before Covid struck, close to 80% of all mortgages came via brokers. Post-Covid that is well over 90% now with that trend looking to stay that way as banks reduce front line staff and branches.
    • Preferential terms. For that reason, mortgage lenders offer preferential terms to brokers as they originate most of the loans for them. Strangely, it can be cheaper to go via a broker to refinance your mortgage, with your own bank, than go to them directly (not so strange when you see the point below).
    • Never worse off. Worst case, a broker can access the same products you will find so you are never worse off for going to a broker.
    • Better outcome. Crucially, if you are dealing with your bank, they aren’t going to say – oh, by the way, ABC Bank is offering cheaper deals than we are at present. As a broker works for you, not the lender, you are far likelier to get a better outcome.
  2. Quality of advice:
    • We work for you, not the lender. This is the true reason to use a broker. A broker works for you, not the bank.
    • What’s best for you. So while you may even be able to source the ‘best mortgage rate’ yourself, how do you actually know what that is? Is it better to go for a 2-year deal vs a 5? What is happening in money markets? Are there hidden fees? Do you fit the lenders’ criteria? What if you want to move? What if you want Interest Only? How does the lender assess your income? What role do your outgoings and credit history play? On and on you can go with these points.
    • What’s best in the market for you. There are hundreds of lenders and thousands of products, often with lenders being very unclear on their lending policy. Can you truly say you know what is best without consulting a professional? Would you buy a house without using a solicitor? Would you invest money without talking to an IFA? You obviously can do those things but it isn’t advisable unless you do the work for a living yourself or have a lot of time on your hands…
  3. The Level of Support:
    • PA / Case Manager Support
      • A good firm will employ a PA/Case Manager to work alongside the broker so you have two points of contact through the arrangement of the loan. This means they can then manage all parties involved for you, which will save you many, many hours of your time.
  4. Additional Services
    • Offer things like Free Wills (ss we do) which can save you money/hassle in other areas.
    • Advice on protecting the loan – it’s all well and good strapping you up with a lifetime of debt, but we think it is essential to talk to you about how to keep you in the property if unforeseen events occur?
    • Preferred partners – we have access to a network of other professionals like IFA’s, Solicitors, Accountants, surveyors, etc – getting these quality referrals can save you a lot of time and headaches down the line.
    • A true client relationship.

You will be working with someone who understands you, wants to work with you from when you first come into contact, to when the mortgage is repaid in full, working with you, in your interests on that journey. It’s not just a transaction

So all told, this answers the question of why use a mortgage broker so you can see why is it worth engaging with a professional advisor that is on your side, to get you the best possible outcome.

Rate Corner

Money markets all nudged up last week. As per recent updates, the outlook is much flatter than had been the case a few weeks back but we’ll keep a close eye on this to see how that classic relationship between inflation and interest rates plays out.

Therefore, our default position stands, unless you have any specific needs, we would most likely recommend a longer-term fixed rate if you have a 25% + deposit, but keep it short term or flexible if less than that figure. 

In the last week:
3 Month Sterling = down by 0.001 at 0.062%
2 Year SWAP = up by 0.046% at 0.522%
5 Year SWAP = up by 0.067% to 0.771%
Bank of England Base Rate = Held at 0.10%

Why use a mortgage broker?

Best Rates

2 Year Variable from 0.99%
2 Year Fixed Rates from 0.83%
5 Year Fixed Rates from 0.96%
BTL Rates from 1.19%

The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process.
Source: Twenty7Tec September 2021

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