Broker vs Bank

Applying for a mortgage of any kind means first deciding whether to take your business directly to a bank or to work with a broker. Different people have different opinions on which is best, as both options have their pros and cons.

In this guide, we’ll be taking a closer look at some advantages of broker support when applying for a mortgage.

Should I use a mortgage broker or go direct to a bank?

Technically speaking, it is perfectly possible to get a good deal with banks and brokers alike. The biggest difference with a broker is that you are not limiting yourself to the select products and services offered by one specific lender.

Working with an independent broker, a whole-of-market mortgage comparison means exactly that. The greater the number of loans and lenders you consider, the more likely you are to walk away with an unbeatable deal.

Some of the most important advantages of working with a qualified independent broker include the following:

  • Access to the widest possible range of mortgage products
  • Independent representation for negotiation purposes
  • Assistance with paperwork and application submission
  • Exclusive deals from ‘not on the High Street’ lenders
  • Advice on alternative loan options, where applicable
  • Support for poor credit or self-employed applicants
  • A much faster and easier application process

It is only advisable to work directly with a bank if you already have the knowledge and experience necessary to negotiate a good deal.

Can mortgage brokers negotiate better deals?

It is worth remembering that mortgage brokers run businesses on a for-profit basis, just like the lenders they work with. As a result, it is in everyone’s best interest that the broker successfully refers borrowers who subsequently take out mortgages.

Therefore, it is also the job of the broker to negotiate the best possible deal on behalf of their clients. If the broker has an established relationship with any number of lenders across the UK, they are in a privileged position to negotiate more confidently and competently than any direct applicant.

Which of the options works out cheaper?

This will depend entirely on the broker you work with and their policies regarding payment. In most instances, working with a broker can work out exponentially cheaper, given their capacity to negotiate a much better deal on your mortgage rates. Even if additional fees are payable when agreeing to the loan, you could save a small fortune with a lower APR and/or reduced overall borrowing costs.

Working with a broker that imposes no fees or charges whatsoever for the applicant may sound like a win-win situation, but why is that broker willing to work for such a small amount of money? If all fees and commissions are payable by the lender, is there a reason for this?

Could I not just do my own online mortgage comparison?

Online mortgage comparison sites are not quite as comprehensive as they appear to be. They may compare deals from major lenders across the UK but are unlikely to incorporate the specialist lenders to an established broker who has access.

This means that even if you carry out a detailed online comparison on your own, you may overlook any number of deals. Working with an independent broker, you are guaranteed a whole-of-market comparison that takes all viable lenders into account.

All with the bonus of independent advice and support, ensuring you make the right decision to safeguard your financial future.

Do I need to speak to a financial adviser?

Speaking to a financial adviser is the way to go if you have questions or concerns regarding your current or future financial position in general. Financial advisers are great for discussing things like business loans, investments, pensions, debt management, trusts, and so on. You will also find some financial advisers that can provide expert support on mortgages and general consumer loans, but not all of them.

The services of expert financial advisers are usually significantly more expensive than those of a mortgage broker. In addition, an independent financial adviser is unlikely to carry out a focused whole-market mortgage comparison on your behalf.

Choosing a mortgage broker

After conducting a series of checks to establish the track record and reputation of a broker, arrange an obligation-free initial consultation to discuss the available options. You will have all the time you need to ask questions and assess whether they are the right type of broker for you.

If at any time you feel as if you are being pressured to go ahead or to move to the next stage faster than you are comfortable with, consider taking your business elsewhere.