I’m often asked whether it’s best to use a mortgage broker or go straight to your own bank when you start looking at buying a house.
Spoiler alert: My answer is pretty much always… get in touch with a mortgage broker. By all means, if you want to contact your bank to see what they have to offer, you do that, but accepting the first thing they offer you and ending your mortgage search there could see you missing out on more suitable deals or, in a worst case scenario, risking rejection.
Here are just a few reasons why.
A mortgage broker could save you hundreds of thousands of pounds
I know it might seem like the easiest option to go straight to your bank and ask them for a mortgage, but your bank will only have a small selection of loans to choose from. Sure, there’s a chance that one of these mortgages might be the absolute best deal for you, but it’s a very slim chance.
If you go to a mortgage broker, they’ll compare hundreds of deals from multiple lenders until they find the best one for you. They’ll present you with a list of the best options, highlighting how much each loan would cost you over the course of your mortgage. It’s amazing to see the true cost of each loan side-by-side and it’s surprising just how much difference the amount you repay each month can make.
In short, your broker could save you tens of thousands of pounds over the course of your mortgage deal.
To learn more about buying your first home, take a look at Can’t Swing a Cat’s first time buyer blog section.
A mortgage broker will take your finances into consideration
Your mortgage broker will take your finances into consideration before highlighting the best mortgage deals, paying close attention to how affordable each one is based on your income and expenses.
If you have a small deposit, they’ll take this into account.
If you’re self employed, they’ll take this into account.
If you have a less than perfect credit rating, they’ll take this into account.
A mortgage broker will highlight the lenders most likely to approve your application
Did you know that if you apply for a mortgage and your application is rejected, it can increase your chances of being rejected again when you apply for another mortgage elsewhere?
Each lender will have a specific set of lending criteria that must be met and some lenders are really choosy about who they say ‘yes’ to. If a lender spots something in your application that they don’t like, whether it’s a late debt repayment in the past or unpredictable freelance income, they may reject your application and trigger further problems for you further down the line.
Thankfully, a mortgage broker can help you avoid the stress that can come with rejections. A good mortgage broker will point you in the direction of the lenders most likely to say ‘yes’ to you, while steering you away from the choosy ones.
Some people assume that if they’ve been with their bank their whole life, they’re guaranteed to get a mortgage from them. This couldn’t be further from the truth. Loyalty doesn’t pay and if your bank is unimpressed by your finances, they won’t think twice about saying ‘no’.
There are plenty of free mortgage brokers out there
While some mortgage brokers charge home buyers a fee for their services, there are countless others that won’t charge you a penny. These mortgage brokers tend to earn money from the banks instead.
When I first started house hunting, I used my estate agent’s mortgage broker. We’ll call him Charlie. Charlie was really nice, he seemed to know his stuff, and he found me a great deal with Nationwide. After a few months he left his job and was replaced by a new broker who we’ll call Lyndsey. We don’t like Lyndsey because she was a bit of a nob.
Six months after Charlie found me my Nationwide deal, the offer expired. This meant I’d have to either reapply for the same deal or find a new one. I decided to pie Lyndsey off and got in touch with online mortgage broker Habito instead.
Habito were brilliant and I reviewed them here. If you fancy using an online broker rather than a face to face one, I’d definitely recommend them.
Although I did speak to them on the phone a couple of times, I dealt with them mostly via online chat and email. It made the process so much easier and since Habito lets you send them documents online, I didn’t have to take time off work to dash to their office with passports, payslips and bank statements. I could simply take photos on my phone or use the office scanner to send copies to my broker in seconds.
If you’d like to use Habito as your mortgage broker, sign up with my refer a friend link and you and I will each earn a £50 John Lewis voucher on successful completion of your mortgage.
If you don’t want to use an online broker, you could use your estate agent’s broker or one through an independent firm. A good broker will increase your chances of getting a mortgage, make the whole process so much easier and save you tons of money.