Economy

How to find a good mortgage broker and the questions to ask them

Mortgage interest rates have been at the top of the news agenda for weeks. In September’s ‘mini-budget’ deals disappeared and interest rates rose sharply as the cost of government borrowing rose.

Since then, the market has been in constant motion. In October, average two-year and five-year fixed rates hit recent highs of 6.65 percent and 6.51 percent, respectively — higher than they had been for years.

Since then, average rates have fallen steadily and the five-year average is now back below 6 percent, but continued lender caution and rumors of falling home prices mean it’s still far from easy to get the right mortgage for you.

Helping hand: The right real estate agent can be a valuable advisor to guide you through the process of buying a home and working out the best mortgage option for you

And that’s before you consider the impact of any future increases in the Bank of England’s base rate.

The Monetary Policy Committee is expected to raise interest rates from the current level of 3 percent when it meets on Dec. 15, which some say could push mortgage rates back up and make buying or moving increasingly unaffordable.

>> Check the latest rates with This is Money’s mortgage calculator

Matt Coulson, Mortgage Adviser at Heron Financial, says: ‘There’s a big “wait and see” trend right now, and it’s fully justified given what’s been reported.

“The main change we’ve seen across the board is that customers are eager to know what their options look like, but they’re not moving forward and not making a decision.”

At such times it may be wise to engage a mortgage broker to help you assess your options and what you can afford. But how do you know if a broker is the right one for you?

We ask experts what to look for when choosing a broker and what questions to ask before becoming their client.

How fast can they get you a mortgage quote?

A good place to start, suggests Vicki Harris, chief operating officer of Kensington Mortgages, is to ask your potential broker about their availability and the current expected timing for the broker’s recommended lender to make a formal offer.

The latter, she says, will play a key role in getting a mortgage deal done at the right time.

Rapidly changing rates over the past few months have seen lenders face increased demand, with many believing they have lowered rates or kept rates artificially high for a period of time to maintain a level of service.

In a rapidly changing market, it is critical to avoid delays by lenders and mortgage brokers.

How many lenders do they work with?

It is important to know how many lenders your broker has access to. Making sure your broker has “all market access” increases your chance of getting the best deal, says Nick Mendes, John Charcol mortgage technical manager.

While many lenders offer broker exclusive rates that aren’t available if you go direct — one of the benefits of using a broker — some brokers may only work with their preferred providers, limiting your choice.

This is especially important if you have special financial circumstances, such as credit blips.

“This is critical as an increasing number of borrowers may not meet the credit criteria of the major banks and so may need to look at some of the more specialized options on the market,” adds Harris.

Are they dealing with “people like you?”

If you have special income or wealth circumstances, such as self-employment or occasional income, it’s worth making sure that your agent not only fully understands your needs, but is also experienced in working with others in similar situations.

“The right broker should have a consistent track record of dealing with people ‘like you’, so it’s important to iron this out from the start,” said Kevin Roberts, director of L&G Mortgage Club.

“A good starting point might be to ask a prospective broker what type of client they usually deal with.”

A Good Match: Making Sure Your Broker Has Experience Working With Clients In Similar Financial Situations Is An Important Part Of Choosing The Right Person For You

A good match: Making sure your broker has experience working with clients in similar financial situations is an important part of choosing the right person for you

However, make sure your broker takes the time to understand your circumstances and your mortgage, not just important if you have a different income profile.

“If you do this wrong, it can be a lot more expensive for the borrower,” says Harris.

‘This can be done, for example, in the form of trade-offs between price and speed; benefits of fixed rates versus tracking rates; choose between a mortgage with higher or lower rates; the likelihood that you will have to get out of the mortgage and what the prepayment charges from the lender are.

“All of these options should be reviewed by your mortgage broker, depending on your individual needs.”

What fees do they charge?

Knowing what fees your broker charges and how payment works is an important part of making sure you choose the right advisor for you. Some charge at the time of an offer, while others charge upon completion.

Before choosing who to work with, a fee comparison can be a helpful way to determine what kind of price you’ll be looking for for services.

Rates differ not only between brokers, but also depending on your mortgage size and the complexity of your needs.

It is also important to understand what is included in that cost. For example, does the mortgage advisor support you throughout the process, or is the administrative work passed on to another team member or department?

This is Money’s mortgage broker partner L&C

This is Money has a long-standing partnership with mortgage broker London & Country.

L&C offers free mortgage advice that helps people discover the right mortgage for them, without having to pay any costs upfront.

The qualified mortgage advisors can help you determine how much you can borrow, which fixed-term deal is right for you, whether a tracker would be better, and explain all the different elements.

They can also advise people on which banks and building societies they are likely to accept.

Borrowers can compare home loans with our best mortgage interest calculator, based on their loan size and home value and can start their application online or speak with a real estate agent over the phone.

Upon successful completion of your mortgage application, L&C receives a commission from the lender and shares a small portion of the fee with This is Money. We do not allow this commercial relationship to affect our editorial independence.

> How This is Money’s partner L&C can help you find a mortgage

What other services does the broker offer?

If it’s your first time buying a home, the process and checklist of things to consider can be overwhelming.

It may be worth asking a prospective broker what other services or products their company offers, such as advice on insurance or debt restructuring.

However, it is important to shop around and not just accept their recommendations. They will often receive a commission for referring to their partner firms, and you may find a better deal elsewhere.

Likewise, some offer hard credit searches that help narrow down the lenders you are likely to borrow from.

Have they worked in a tough market?

Mortgage rates have been low for over a decade and while this has been beneficial for many getting up the housing ladder, it means that as interest rates rise you need to make sure you work with a real estate agent who is experienced in these conditions.

Options that would have previously been amortized, such as starting with a tracker rate, may now be the most cost-effective option, and it’s beneficial to have an advisor experienced in working in these circumstances.

But don’t necessarily equate longevity with the person being the right broker for you, Mendes warns.

Don’t forget to check out their reviews

Finally, always check the reviews for brokers or companies before proceeding.

“Ultimately, whether you’re a first-time borrower or an experienced borrower, it’s critical that you feel supported by your advisor,” says Roberts.

“Take the time to do your research, whether it be through Trustpilot reviews, talking to friends, or reading testimonials online.”

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate contract is about to expire, or because they have agreed on a home purchase, should explore their options as soon as possible.

This is Money’s best mortgage interest calculator powered by L&C that can show you deals that match your mortgage and property value

What if I have to borrow again?

Borrowers should compare rates and speak with a mortgage broker and be prepared to trade to secure a rate.

Anyone with a fixed-rate deal expiring in the next six to nine months should research how much it would cost them to re-mortgage now — and consider getting a new deal.

Most mortgage agreements allow fees to be added to the loan and are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I buy a house?

Those with an agreed home purchase should also aim to secure rates as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should be careful not to overextend themselves and be prepared for the possibility that house prices could fall from their current highs, due to higher mortgage rates limiting people’s borrowing capacity.

Compare mortgage payments

The best way to compare mortgage rates and find the right deal for you is to talk to a good real estate agent.

You can use our best mortgage interest calculator to display deals that match your home value, mortgage size, term and fixed interest needs.

However, bear in mind that rates can change quickly, so if you need a mortgage it’s advice to compare rates and then speak to an estate agent as soon as possible so they can help you find the right one mortgage for you.

> Check out the best fixed rate mortgages you can apply for

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.

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Jacky

The author of what'snew2day.com is dedicated to keeping you up-to-date on the latest news and information.

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