10 Questions To Ask Your Mortgage Broker

Finding the right mortgage can be daunting, and with more lenders and products popping up every day, working with an experienced, qualified broker is the best way to ensure you find the most competitive deal.

But before you approach any advisor, it’s important to be prepared. Remember, the more your broker knows about you, the better advice and assistance you will receive throughout the process.

We’ve compiled a list of key questions you should ask your broker to help ensure you’re confident in your choice before committing to any mortgage deal.

1) Are you a regulated broker?

First and foremost, it’s important to check your mortgage advisor’s credentials before you work with them.

2) How many lenders do you have access to?

When you approach a broker, one of the first things you should do is ascertain whether they provide advice on mortgage products from the whole market or a limited selection of lenders.

There are three main types of brokers:

• Some are tied to a specific lender.
• Some look at deals from a limited list of preferred lenders.
• Some check the whole market for the most comprehensive range of products.

It’s important to note that while whole-of-market brokers have access to a panel of lenders who represent each mortgage market sector, this does not necessarily mean they compare deals from every single UK lender.

3) How do you charge for your services?

Mortgage brokers will either charge the borrower a fee, work on a commission basis (meaning you won’t be charged, but the broker will receive a cut from your chosen lender), or combine the two.

Some advisors have special terms, such as charging a fee for your first mortgage but agreeing to arrange any subsequent mortgages or remortgages free of charge.

Even if you are charged a fee for assistance from a mortgage broker or advisor, anything you pay might be good value, considering how much money and time you could save in the long run.

4) Which types of mortgages are available?

When you take out a mortgage, you must choose how to repay it.

With repayment mortgages, you pay both mortgage interest and some of the loan itself each month until the term ends, at which point you will have repaid the entire debt.

With interest-only mortgages, you pay back only the interest owed, so monthly payments are lower, but you will owe the whole capital at the end of the term.

It’s also worth asking your advisor about other products, such as cashback, offset or flexible mortgages. They can advise whether a fixed, standard variable or tracker rate suits your circumstances.

5) What is the interest rate, and how will it change over time?

Many mortgage offers are made at a cheaper “incentive rate”, typically between two to five years. After this time, many lenders move you onto their standard variable rate (SVR).

Suppose the interest rate offered is below the lender’s usual SVR. In that case, it’s essential to understand the consequences when this period is up so you can determine whether it’s an affordable long-term option.

Some providers will allow you to “fix” your deal for longer when the incentive period ends, while others stipulate that you must revert to their SVR. You can ask a broker to check the small print before you commit.

6) How much can I borrow?

Your credit score is another key factor impacting how favourably lenders look at you. If you have clean credit, you’re likely to be in a stronger position – although it is still possible to arrange a mortgage if you have a history of bad credit.

If you can’t borrow as much as you would like, you could wait and save a larger deposit or adjust your property search criteria—a broker can advise you on the best action plan for your situation.

7) How much deposit do I need?

All lenders have different deposit requirements, but as a rough guide, 85% – 90% loan to value (LTV) is the norm for residential property. However, an increasing number now accept 5% deposits, subject to your other circumstances.

That being said, the more you can put down as a deposit, the better the deals your mortgage advisor will be able to find you. The greater your financial commitment, the more trust is instilled in lenders.

8) How much will I be paying in fees?

Most providers charge mortgage arrangement fees, which vary by lender but are usually between £1,000 and £2,000. You can ask your advisor what to expect from your selected lender.

Other costs include mortgage valuation fees, surveys, and sometimes account and booking fees. Many providers also charge early repayment charges (ERCs) and impose exit fees.

Be sure to ask your broker to check the contracts carefully and calculate all potential costs you may incur so there aren’t any nasty surprises later on.

9) Is the mortgage transferable if I move to another property?

If you’re taking out a long-term fixed, capped, or discounted mortgage or if the redemption penalties last for a long period of time, it’s particularly important to find out what will happen if you want to move house.

Nowadays, many lenders make their mortgages portable, meaning you can transfer the mortgage on the same terms and conditions to a different property if you decide to move.

10) Can you advise on other things?

If you start working with a broker, you can ask any other questions to give you added peace of mind with your home purchase. As mortgage brokers are financial advisors, they are also qualified to advise on related financial matters.

Insurance is a key area closely related to mortgages. If you need advice on health insurance, life insurance, income protection, or any other products, your mortgage broker should be more than happy to oblige.

If you want to speak about our services, call 0330 818 7026 or enquire.