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- Should I Use A Mortgage Broker Or Bank, Which Is Better?
Should you get your mortgage from your bank?
In this guide we look at the benefits and downsides to getting your mortgage both directly from a lender, and with the help of a mortgage broker, so you can make an informed decision about the best path for you.
Ready to find out your mortgage options? Get free expert advice from our broker partner, Mojo Mortgages.
Is it better to get mortgage from a bank or broker?
Whether you apply for a mortgage directly through your bank or choose a mortgage brokers, it's likely you'll use a mortgage broker either way as many banks employ their own in-house brokers. So the real question is, should I use a bank or building society tied mortgage broker or a whole-of-market mortgage broker?
Whether you'd be more comfortable using a mortgage broker than applying directly with a lender will come down to your individual needs and circumstances:
Your finances. Some people have a more limited choice of lenders willing to approve their application. This could be due to factors such as low income/affordability, poor credit score, less straightforward employment history etc. People in these circumstance will usually benefit from using a whole-of-market broker purely because they have access to a wider range of deals.
The type of property you want to buy and why. If you’re looking to buy a unique property, perhaps a non-standard construction property, listed building, or you want to build your own home, it can be more difficult to find a lender. The majority of high street lenders prefer people to buy straightforward bricks and mortar houses that retain value well. If that’s not your goal, a mortgage broker could be a better route.
How important it is to get the best deal available to you. If your major concern is simply getting a mortgage as quickly as possible, going to your own bank can be the quickest option for some people. If you're keen to get the most competitive rates and terms for your circumstances, however, it’s probably best to look at the wider market. You could do so independently, but using a mortgage broker to compare deals is easier, quicker and likely more thorough.
Personal preference. Another consideration is simply your own preferences and the level of assistance you want or need. If you’re confident in your mortgage knowledge and like to control every step of the process, a mortgage broker may not be the right choice for you. Mortgage brokers tend to take care of a lot of the negotiations between parties (i.e solicitors, vendors, the lender) as well as the application for you, so if you'd prefer to yourself, then going directly to a lender may be more suitable.
Ready to find out your mortgage options? Get free expert advice from our broker partner, Mojo Mortgages.
Where should I get my mortgage from?
There are a few different types of mortgage lenders in the UK, and which is best suited to you depend on your needs. You might get your mortgage from:
A high street bank
Mainstream banks such as Santander, HSBC, NatWest, and Barclays that offer general banking services also offer mortgages. Some people prefer to approach their own bank when it comes to getting a mortgage.
However, it’s useful to know that already being a customer of a bank will not usually have any impact on the acceptance of your application, though some may be willing to offer exclusive rates to existing customers.
A building society
Building societies offer similar services to a bank, but are often more flexible. That's because they are structured as a cooperative, so there is more focus on member needs. Building societies can sometimes offer preferable rates, or consider applicants/properties that a bank may deem too risky.
Some of the most popular building societies in the UK are Nationwide, Yorkshire, Skipton, Coventry and Leeds.
A specialist mortgage lender
Specialist lenders tend to focus purely on mortgage lending, and often cater to a specific type of borrower. For example, some offer mortgages purely to self-employed and contract workers, or people with bad credit.
Some specialist lenders only accept customers through what’s known as an intermediary (in other words, a broker) - and there will usually be a particular group of brokers that they work with.
A credit union
Credit unions are nonprofit, community-based organisations often used by people who are turned down for a traditional bank account. Mortgage lending through a credit union is not too common in the UK, but is more so in Northern Ireland than the mainland.
Usually you'll need to be a member of your local credit union for a minimum length of time before you could take out a mortgage with them. Their interest rates are typically less competitive, but they can be more flexible with financial difficulties, should you experience them.
Getting a mortgage from a bank
You can usually go directly to any type of mortgage lender to apply for a mortgage. This route can be quicker, and in some cases your own bank may reward customer loyalty by giving you a more competitive rate than non-customers.
However, any lender you select won’t necessarily have the best rates available to you - even your own bank. It’s important to compare mortgages across a number of different lenders - or ask a broker to do that for you.
Advantages of getting your mortgages from a bank
Streamlined application process. The application process can be shorter and slightly simpler if you apply for a mortgage with your own bank or building society, as they already have access to your information and financial history.
No broker fees. By dealing directly with a lender, you won't need to worry about any broker fees.
Potential for preferential rates. Banks may offer loyalty discounts or preferential interest rates to their established customers.
It’s easier to set up an offset mortgage. If you're interested in an offset mortgage, a feature that can reduce the amount of interest you pay, it's often simpler to set one up with your own bank.
Ask questions directly. Communicating directly with the lender removes the "middleman," allowing you to ask questions and receive answers straight from the source.
Disadvantages of getting your mortgages from a bank
Limited product choice. A lender can only offer you mortgage products from their own range. This limited selection may not provide the most competitive interest rates or the specific loan terms that best suit you and your circumstances.
Not all lenders accept all types of applicants. Approaching a lender without first understanding their specific criteria can result in a declined application, which could negatively impact your credit score and impact future applications
Lack of impartial advice. A bank's mortgage advisor is ultimately a salesperson for their own products. Therefore, the advice you receive will not be completely impartial, as their primary goal is to sell you a mortgage from their own range.
You'll handle the admin yourself. Without a dedicated mortgage broker to liaise between solicitors, estate agents, and the lender, you will be responsible for managing these communications. This can be time-consuming and stressful.
Time-consuming comparisons. Comparing mortgages online can be time-intensive to navigate, and there’s a chance you’ll miss out on certain offers. Internet rates tables and comparison tools aren’t able to take your individual circumstances into account and some promote sponsored products that won’t necessarily be the best for you.
Getting a mortgage through a broker
Whole-of-market brokers have good working relationships with banks, building societies and specialist mortgage lenders, meaning they can assess your circumstances and immediately know which lender might be the best fit for your situation.
Brokers also generally provide more detailed advice than a lender, which can be particularly helpful for first-time buyers. They usually also provide more services, such as completing the application and managing communications on your behalf.
Advantages of getting your mortgages from a broker
Expert knowledge. Mortgage brokers have a deep understanding of lender criteria. They deal with different lenders daily, so they know which ones are most likely to approve your application and which to avoid. By guiding you away from lenders whose criteria you don't meet, a broker can prevent a likely decline, which helps protect your credit score and saves you time and application fees.
Receive impartial advice. A whole-of-market mortgage broker is not tied to a single institution. Their goal is to find the most suitable mortgage for you from a wide range of lenders, ensuring the advice you receive is unbiased.
Mortgage admin support. Mortgage brokers can help complete your application, the associated paperwork and the ongoing communication that is necessary throughout your mortgage application.
Support with unique or complex situations. If you have complex circumstances, a mortgage broker can be invaluable. Whether you're an expat, an older borrower, self-employed, have a history of bad credit, or are buying an unconventional property, a mortgage broker may be able to help you find a lender that you may not be able to access by yourself.
Demystifies mortgage jargon. Mortgages can be complicated and the industry is known for its confusing terminology. A good broker will cut through the jargon and explain everything in simple terms. This can give you a better understanding of what you’re taking on and how to get the best out of your mortgage.
Save time and hassle. Using a mortgage broker to compare deals on the market can save you a lot of time compared to doing this yourself. They have knowledge of the most recent rates and products readily available.
Access to exclusive deals. Some lenders offer mortgage products exclusively through intermediaries, meaning you can't access them by going direct. A broker may also be able to negotiate special deals or rates on your behalf that are not available to the general public.
Get advice on related insurance. Many mortgage brokers are also able to advise on relevant insurance products to support your mortgage.
Receive support for a successful future application. If you’re not able to get a mortgage in your current circumstances, can provide professional advice and a clear action plan on how to improve your credit file and financial position to improve your chances of being successful with an application in the future.
Disadvantages of getting your mortgages from a broker
Potential broker fees. The major disadvantage of a mortgage broker is the additional fees involved. Most brokers will charge a fee, although some take their fee from the lender, rather than the customer. It’s a good idea to understand what the payment structure is before selecting the right broker for you
It could take longer to compare your options. It can take a bit longer to get to the formal application stage when going through a broker, because they search the market for the best deal for you, rather than putting an application in straight away.
Looking to speak to a broker? Our partner, Mojo Mortgages, will get to know you and the type of property you're looking for so they can provide personalised mortgage recommendations.
How to get the best mortgage deal for me
The interest rate is the most important factor when comparing mortgages, but always look at the APRC (annual percentage rate of charge) to get a better idea of the overall cost. The APRC must legally be shown by all lenders, and takes into account the fees involved with taking out a mortgage, as well as the interest charges over the mortgage term.
That said, it’s fairly unusual to take out a mortgage and stay on the same product for the full term, which is typically 30 years in the UK. Most people take advantage of a lower initial rate, and then remortgage when it ends to ensure they keep the lowest interest rate available to them.
When it comes down to finding the best mortgage deal for you, whether you use a bank or mortgage broker will depend on your personal circumstances and preference. Either way, it’s always best to compare deals across the market, rather than just opting for the first lender you find.
Mortgages from a bank vs. a broker FAQs
Do mortgage brokers get better rates?
It's possible that an independent mortgage broker could find you better interest rates for your circumstance than you’d get directly from a mortgage lender, purely due to the range of deals available to them. However, they may also be able to advise you about increasing the lower priced deals available to you by making amendments to your application and deposit. Some mortgage brokers can also access broker-exclusive deals for some clients, which aren't available directly.
Is it more expensive using a mortgage broker?
It depends, some charge a fee, but others, like our broker partner, Mojo Mortgages, are fee-free. However, even those who charge for their services have the potential to be less expensive overall, as they could potentially still save you more on your mortgage than you'd pay in fees.
Are you more likely to get approved for a mortgage with a broker?
It's possible, yes. This is because they work with lender criteria daily, so it's much easier for them to identify whether your circumstances fit lender criteria before making an application. So it's more that they can save you from applying with the wrong lender, and recommend the right one for your circumstances.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
Uswitch makes introductions to Mojo Mortgages to provide mortgage solutions.
Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website.
Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH.
Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215)
Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH. To contact Mojo by phone, please call 0333 123 0012.