Mortgage Broker or Bank? Which is better?
If you are ready to buy your first home, the first step is to consider your mortgage options, and at this point you may be thinking, Mortgage Broker or Bank? Which is better?
In this article we will explore all the pros and cons of using a Mortgage Broker, or going direct to your Bank, to help you decide which route is best for you.
Should you go directly to a bank for your mortgage?
Approaching a bank for a Mortgage will be suitable if you have an excellent credit history and if you are in a stable financial situation because you will likely fit their criteria.
Additionally, if you have been with your bank for a long time, and you have managed your finances well over this time, you are likely to have developed a mutual level of trust and understanding. Trust that you are satisfied with the banks way of conducting business and the service it provides, and their understanding of your finances.
Banks have ONE set of Mortgage products and can only offer you these products. This means you have very limited options and may be missing out on a better deal from another lender.
Additionally, if you are in a unique employment situation, like being self-employed for instance, or having recently returned from Furlough, or if you have a less than perfect credit history, it is unlikely you will be accepted by a bank for a Mortgage.
In these situations, it will be beneficial for you to work with a Mortgage Broker who can match you with a lender who accept your individual circumstances.
Should I work with a mortgage broker?
Mortgage brokers specialise in helping home buyers find a mortgage that suits their individual circumstances.
Mortgage Brokers have access to a range of mortgage products, allowing you to compare interest rates, charges, and loan features from various banks and non-bank lenders. Mortgage Brokers that are Independent and Whole of Market can offer you the best, lowest cost deal out of over 100 lenders. Simply put, brokers can offer you far more options than a bank, which enables you to obtain the best deal possible.
Mortgage Brokers will also guide you through each step of the Mortgage Process and will regularly review your mortgage to ensure the interest rate is still the most competitive, something that Banks are not obliged to do.
Most banks will try and win your business by not charging you a fee for taking out a mortgage with them directly and they will tell you Mortgage Brokers charge you a hefty fee. This is not the case.
Almost all Mortgage Brokers will offer you advice, research and have lots of discussions with you for free. Some Mortgage brokers do charge an upfront fee for completing your application. However, when considering the amount of work this involves:
Researching the market
Completing a review of your finances – including assessing your credit file
Completing an affordability calculatior with all lenders to find out the range of borrowing available to you
Tailoring the mortgage product to suit your individual neds- ie unique circumstances, poor credit, unusual employment circumstances.
Recommending the most suitable product
Submitting a Decision in Principle Application to ensure the lender will accept your application
Applying for the full mortgage application
Submitting all supporting documentation to the lender
Liaising with the underwriter
Arranging the valuation
Obtaining your offer.
Liaising with your Solicitor for a smooth completion of your mortgage
By engaging a mortgage broker to do all the above, this means you do not have to. Eliminating the stress of applying for a mortgage. Our fee for all the above is £495.
Brokers also differ in qualifications and experience. There are a huge number of Mortgage Brokers out there, and this can sometimes make it difficult to determine which ones have the best credentials to help you.
In this situation, it pays to practice due diligence before settling with a broker. Here are some questions you can ask a broker to get a picture of their skills and qualifications:
Do you have the CeMAP qualification required to advise me on mortgages?
How many years have you been working in the industry?
Are you independent and whole of market?
What are your fees?
How will you help me look for the most suitable mortgage?
How do you choose the best deal for me?
Do you have Client reviews I can read?
The internet is a good place to start your search. It is a good idea to understand as much about the mortgage process as possible, however a good mortgage broker will guide you through each step of the process.
Our First Time Buyer lounge is a fantastic place to start to find out all the information that you need before you start your mortgage journey.
So I hope this post has helped you answer the question: Mortgage Broker or Bank? Which is better?
Please contact us to find out more details about The Mortgage Girl services. We are delighted to provide you with initial, free advice tailored to your individual circumstances.
Looking for more great mortgage news, tips & advice? Check out our last blog post: Can I get a mortgage with 10 percent deposit?