A mortgage broker is someone who compares the mortgage market and provides impartial advice to help you find the right deal for you and your circumstances. Nowadays you can access mortgage brokers online for your convenience, or in person if you prefer to talk through your options face to face.
Some mortgage brokers charge you a fee for their service, while others keep their service free by taking commission from the mortgage lender.
The mortgage brokering industry is regulated by the Financial Conduct Authority (FCA), so you can expect certain standards in the quality of service you receive, and also be assured regarding your rights in the event that you make a financial loss.
In your very first conversation with a mortgage broker, you must be told upfront what costs you might be expected to pay should you decide to go ahead and use their services.
If you are required to pay, then they must tell you whether you will have to pay them an hourly or daily rate, a percentage of the mortgage you are borrowing, or a simple flat fee.
Some mortgage brokers off their services for free, but they will take their payment as commission from the mortgage lender.
Despite regulations requiring mortgage brokers to give you the most suitable deal for you and your financial situation, that only applies to the range of mortgages they offer.
Many of the mortgage brokers who take their fees from the mortgage providers, are unlikely to cover 'whole of market'. They may not also be entirely independent or impartial either.
That is because, when showing you the range of mortgages available, they may decide to exclude the ones that don't pay them. They may also be more likely to push you towards the ones that pay them a higher fee.
However, the regulations do state that the mortgage broker would be held liable in the event that a deal they offered was later found to be completely unsuitable. So, the risk they would be taking should assure you that, for the most part, that the mortgage broker will remain impartial.
Having said that, some mortgage brokers may have access to special deals that are not available on the market, purely because they have an ongoing commercial relationship with that lender.
For peace of mind, you may decide to pay a mortgage broker, but it all depends on how much you are willing to pay, or if doing the research yourself might prove to be more beneficial.
Make sure they are independant, cover the whole market, and compare different rates
Find out how they are paid - do they take commission from the lender or do they take money off you?
Check they are properly qualified and regulated
Keep comparing online and also check with your current account provider for a better deal
Do your own search - don't be bullied by an estate agent into using their mortgage broker
Don't take the first adviser you find - keep comparing and look for reviews from other homebuyers
Don't fall for the upsell on insurance add-ons unless you've done your research – some of them can be useful
Regardless of whether or not you decide to take up the services of a mortgage broker, it is important you research the mortgage market.
Comparing mortgages online is also significantly easier as you can read up the key information side by side and see which ones add up to a better deal.
In addition to this, it is also definitely worth speaking to your current account provider to see what mortgages they offer. You can check their deals online, but they are likely to be the ones they use to try to entice new customers.
There is a chance that you could leverage the fact that you are a loyal existing customer to see if you will get a better mortgage deal from your bank – one that no other mortgage broker could get.
It is also worth remembering that banks will only show you the deals they have. Other banks could have far better deals - so continuing to compare is key.
You can check through the website "unbiased" for local qualified mortgage advisers, regulated by the FCA.
Even if you are buying a property through an estate agent, don't allow them to bully you into using their mortgage adviser. They may not choose one that is right for you. Always insist on doing your own research first.
Similarly, if you get to the stage of having your mortgage approved thanks to your broker's assistance, don't get bullied into taking their recommended mortgage insurance add-ons.
Many of these services could prove to be highly useful, but again, do your own research and compare the mortgage market.
You will likely want mortgage protection insurance in some form or another, be it life assurance, critical illness cover, or term life insurance, but the deals provided by the mortgage broker or lender may not serve your interests fully.
Until you decide you want to use a mortgage broker, and before you find the right one for you, keep comparing online and plan ahead for repaying your mortgage for the next 20 years of your life – it's a huge commitment, and should not be made too quickly.
In the event that you get bad advice from a mortgage broker, you could get a refund. The FCA regulates the industry and will want to make sure that anyone acting as a broker only gives good advice.
However, in the event that you go ahead and take that advice, and only later learn that it was bad – say, when the deal does not work out the way you hoped, and you can no longer afford to repay your mortgage - then you could also be entitled to compensation.
Mortgage brokers are liable for the advice they give so, legally speaking, it must be reasonable advice, and they must have taken into serious consideration your ability to repay that mortgage.
If in doubt, do a quick search of your mortgage broker's company and see what other customers have had to say about them. Also, you can double check that they are indeed listed on the FCA register of regulated mortgage brokers and are fully qualified.