Mortgage brokers can be of great value to home buyers needing information and advice when applying for a mortgage, dealing with clients who may want to take out a mortgage for a variety of purposes.
How do Mortgage Brokers Work?
Once a borrower approaches a mortgage broker for help, the broker will first collect information about the person’s income, employment, and credit rating to help them qualify for a mortgage and determine what mortgage would be most appropriate for them (this may include a full range of mortgage types, including variable rate mortgages, fixed rate mortgages, offset mortgages, capped rate mortgages, joint mortgages, etc.). The mortgage broker will find the best mortgage rates available on the market for their clients by contacting a variety of mortgage lenders, and although the borrower will make the final decision, the broker may also suggest a suitable loan amount.
There are a number of mortgage brokers out there who specialise in certain areas, though many cover all types of mortgages.
Commercial Mortgage Brokers
Commercial mortgage brokers use their expertise to help investors and business owners, and are able to source good mortgage deals in retail, office, industry and leisure sectors. Due to the present financial crisis, commercial lenders are making it harder for those in business acquire a mortgage due to the tightening of various policies, a commercial mortgage broker may prove invaluable for helping investors find the best deals on commercial mortgages.
Buy to Let Mortgage Brokers
Those in business who require a mortgage in order to rent their property out should also consider obtaining advice from mortgage brokers. A buy to let mortgage broker can help landlords find the best buy to let mortgages which will suit their property businesses, and specialist buy to let mortgage brokers will have a detailed knowledge of that side of the property market. With buy to let mortgages becoming more popular, such a service can be invaluable.
Shared Ownership Mortgage Brokers
Specifically for homebuyers who require an affordable financial product, shared ownership mortgage brokers will help locate the best housing associations to use when sharing ownership with, and paying rent on a property owned by, these associations. A shared ownership mortgage broker will also advise how much should be borrowed on such a mortgage, and therefore how much of the property a person should own to fit their financial needs. Shared ownership mortgages can be an excellent option for borrowers without much capital or income.
Bad Credit Mortgage Brokers
Whereas approaching one bank for help would limit borrowers in their search to find cheap mortgage deals, the best mortgage brokers will check out the vast majority of lenders – a main advantage of using their services. They can help people in any financial situation, even those with a bad credit rating. Specialist bad credit mortgage brokers may be employed: these brokers focus entirely on helping clients with bad credit get onto the property ladder by obtaining their first mortgage loans.
Independent Mortgage Brokers
Of course, this will all come at a price. Independent mortgage brokers will charge an upfront or completion fee for their services, on either an hourly rate or flat fee basis. This will be in addition to any other relevant mortgage fees.
Mortgage broker fees can be avoided, however, by contacting a broker working on commission by a lender, though there is no way of ensuring that they will make recommendations based on the best interests of the borrower rather than giving a response that will earn them the greatest commission.
An independent mortgage broker may alternatively take commission but also offer a fee option which, although it will add an additional cost to the mortgage process, should give the borrower the peace of mind gained from the knowledge that they are receiving truly independent advice.