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Do You Need a Mortgage Broker?

Written by Reviewed by Emma Lunn

7th Apr 2020 (Last updated on 16th Jul 2020) 8 minute read

A mortgage broker, or mortgage adviser, can be a huge benefit to potential homebuyers looking to secure a mortgage. Although it is not essential to use a broker, their advice and knowledge can be invaluable.

Mortgage brokers may be able to access better deals and will be able to assist you in making a strong mortgage application. They will also be able to find a lender and mortgage product that is right for you. However, you may find this service comes with a fee and you should be aware of the role of a mortgage broker before proceeding.  

In this guide, with the help of our finance and property experts, Compare My Move will look at the role of a mortgage broker, what they can offer and how they can help you with your mortgage application.

This article will cover the following:
  1. What is a Mortgage Broker?
  2. Who Can Use a Mortgage Broker?
  3. What Are the Advantages of Using a Mortgage Broker?
  4. What Are the Disadvantages of Using a Mortgage Broker?
  5. Should I Hire a Mortgage Broker Via the Estate Agent?
  6. How Do I Prepare for a Meeting with a Mortgage Broker?
  7. What If I’ve Been Given Poor Advice?
  8. Save on Your Home Move with Compare My Move

What is a Mortgage Broker?

Mortgage brokers are licensed and regulated financial professionals who work as an intermediary between an individual and  a mortgage lender. Using a mortgage broker will often result in getting a better mortgage deal than if you'd gone direct to a lender. 

Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and need to hold specific qualifications to work legally. Following the Mortgage Market Review in 2014, rules on the qualifications of all mortgage brokers and the information they must provide about their services and fees are now much stricter.

A mortgage broker will assess your financial situation then recommend a suitable mortgage. They will do this by using software which can search through mortgage deals much more quickly than you’d be able to yourself.

But it’s not just about technology – a broker will know which lenders are likely to accept your application and which lenders will look most favourably on the type of property you’re buying. 

One of the risks of not using a mortgage broker is that you might apply for a mortgage you’re unlikely to get. If you’re rejected for a mortgage, this will have a negative effect on your credit report.

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Who Can Use a Mortgage Broker?

Anyone looking to buy a property can use a mortgage broker, but some people may benefit from the service more than others. 

For example, a mortgage brokers can advise you if you are looking to get a mortgage whilst working a zero-hour contract or if you are trying to buy a house with bad credit

They will be able to advise you on what you can do to strengthen your application and recommend lenders who are more likely to approve you. Essentially their role is to ensure you get the best deal for your circumstances.

You may also want to look at hiring a mortgage broker if you are considering remortgaging your home. They can give you access to a wider range of alternative mortgage options and advise you on whether you should stay with your current lender or look for a better deal elsewhere.

What Are the Advantages of Using a Mortgage Broker?

The main advantages to hiring a mortgage broker are their convenience, expertise and access to market knowledge. They have better access to the market and various deals, can save you the time and legwork when it comes to researching and will be able to manage your fees. Below we’ve listed the advantages of hiring a mortgage broker:

Market Knowledge

A good mortgage broker will be up to date on available mortgage products, including new deals, and relevant lending criteria. 
It is also possible that they will have access to deals that might not be available to you if you went straight to a lender. 

Advice Tailored to Your Circumstances

A broker will be able to discuss the different types of mortgages available and review your financial situation to see how much mortgage you can afford.  

They will also know which lenders will suit which customer. For example, those which will lend to individuals who are self-employed. Also, not all lenders lend on all types of property – some won’t lend on new builds or flats in tower blocks above a certain height.

Saving Money and Managing Fees

By finding the best mortgage deal for your needs, a mortgage broker could potentially save you thousands of pounds over the term of your mortgage. 

A broker can calculate when it’s worth paying a high arrangement fee for a particular mortgage, or when a fee-free deal is better value.

Save Time and Reduce Stress

With their market knowledge and experience in the field, having a mortgage broker on board can save you far more time on your research and application than if you were to search the market yourself.

They can also help you complete the paperwork for your mortgage application. Once the application is submitted, they will be able to keep track of its progress via their contacts at the lender. 

Hiring a mortgage broker can also make the mortgage application a lot less stressful and the time you will save and the reassurance of the broker’s expertise will make the whole process feel a lot smoother.  

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What Are the Disadvantages of Using a Mortgage Broker?

Although there are many advantages to using a mortgage broker, you must also consider the disadvantages and bear in mind that using a broker might not be the best solution for everyone. Below are some of the disadvantages of hiring a mortgage broker:

It Comes at a Cost

You may be charged a fee by the mortgage broker. They should tell you what this is, and how it is calculated, before you hire them. 

  • An hourly rate - this is a variable charge meaning the more hours that they work, the more it will cost you
  • A flat fee - This is a single fixed fee for a mortgage broker's service
  • A commission-based fee paid by the lender  - this is where the mortgage broker receives a percentage of the total mortgage loan from the lender as commission
  • A combination of the three. 

You will need to factor in the cost of hiring a mortgage broker on top of all other costs associated with buying a house, such as legal fees and surveys. 

Not All Brokers Search The Whole Market

With regards to the commission earned by mortgage brokers, this may mean that they are tied to a particular mortgage lender. In-house mortgage brokers at banks and building societies will only advise on mortgages from that particular lender. Brokers who work in conjunction with estate agents and housebuilders are likely to work from a limited panel of lenders.

According to FCA research, commission remains the dominant source of revenue for mortgage broking, accounting for 79% of revenue. Note that brokers are obliged to tell you exactly what they’ll be paid before you apply.

You Could Miss Out on Direct-Only Deals

By using a mortgage broker you could miss out on direct-only mortgage deals offered by certain lenders. Also, a mortgage broker might not be able to advise on “product transfers” with your existing lender when you remortgage.

Should I Hire a Mortgage Broker Via the Estate Agent?

During your property search, estate agents may suggest you use their in-house broker. These mortgage brokers often work with the estate agents, earning the agent a fee for the sale.

This is rarely a good idea as this type of broker is likely to only work from a limited panel of lenders, not look at the whole mortgage market. It is illegal for an estate agent to refuse to pass your offer to a vendor if you don’t use their mortgage broker. You are not tied to using the broker recommended by the estate agent, even if you are buying the home with them.

How Do I Prepare for a Meeting with a Mortgage Broker?

The more prepared you are for your meeting with your mortgage broker, the quicker the process will be. It will also enable the broker to better tailor their search for the best mortgage for you. 

You will need to take evidence of your income and outgoings such as payslips and bank statements. It is also worth preparing a set of questions to ask, so you can get the most out of their service. These questions can be a good starting point: 

  • Are they approved by the Financial Conduct Authority? 
  • What level of qualifications do they hold and what experience do they have?
  • Are they whole-of-market or are they tied to a specific lender?
  • What do they charge and how is their fee paid?
  • What is included in their service? Will they handle all the admin and chase lenders?

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What If I’ve Been Given Poor Advice?

Mortgage brokers must be regulated by the Financial Conduct Authority. You will be able to check this on the FCA register.

If the advice they have given to you is poor, you should complain to the firm in the first instance. If they don’t resolve your complaint satisfactorily, you can take your case to the Financial Ombudsman Service.


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Adele MacGregor

Having written for PerformanceIN, WalesOnline, Grazia Magazine and The Olive Press, Adele now writes advice articles for home movers, first-time buyers and house sellers alike.

Emma Lunn

Reviewed by Emma Lunn

Freelance Personal Finance Journalist,

Emma Lunn is an award-winning journalist who specialises in personal finance, consumer issues and property.