Buying a home and taking out a mortgage is likely to be the most expensive purchase in your lifetime – so it’s important you get it right.
There is so much choice out there in the mortgage market that it’s not immediately obvious what you should do. For example, do you go for a fixed or variable rate mortgage
, how long should the borrowing term be and what are the pros and cons of different length deals? These are just a few of many considerations.
It’s no wonder that many people choose to take professional advice – whether that’s from a mortgage broker or direct from a bank. But which is better? We take a look at the differences between mortgage brokers and banks.
What is a mortgage broker?
Put simply, a mortgage broker is a person or company that arranges a mortgage between a borrower and a lender. Some brokers will charge a fee to the borrower for their advice and they may also be paid by the lender for introducing customers to them.
Mortgage brokers – sometimes also known as mortgage intermediaries – are consistently responsible for completing three in every four new mortgages
and experts believe this will certainly continue to be the case going forward.
What are the advantages of going to a mortgage broker?
There are four main benefits to going to a mortgage broker.
- Market comparisons. Brokers can offer mortgages either from a panel of several lenders or from the ‘whole of market’. This means you’re able to see and compare many more different mortgage deals. So even if the broker does charge for advice, it’s possible that you can still save money in the long run through getting a cheaper mortgage.
- Independence. For brokers that offer a ‘whole of market’ service, they have no ties to any specific lenders and customers value the independence that these brokers can provide.
- Speed. Making an appointment with a broker is usually quicker than going directly to a bank; some of the big banks will make you wait around two weeks just to get a mortgage appointment.
- Convenience. Some brokers will come to your home and see you beyond traditional working hours. They will also deal with all the paperwork for you, making the application process as simple as possible.
Why might you want to go to a mortgage lender directly?
Some people have done their own research and feel confident they know which mortgage deal and lender is right for them. If that’s the case, they don’t necessarily need independent advice or further market comparisons from a broker. It’s worth noting that some lenders such as TSB provide the same mortgages via brokers and direct, so you’re sure you’re seeing their best deals regardless of how you apply. But not all lenders do this, sometimes favouring brokers or direct over the other.
Other people may also prefer to manage their finances with their local bank branch that they may have been banking with for many years and are already familiar with.
And finally – some people prefer to not pay additional fees to brokers – though it’s important to note that not all brokers charge fees for advice.
Which is better – mortgage brokers or banks direct?
Clearly, going to mortgage brokers is more popular than going to a bank directly and there are many benefits to doing so. But whether one is better than the other is all down to personal circumstances and preference. Mortgages can be very complicated – especially for first time buyers who have never been through the process before – but regardless of which route you take, both will be able to guide you through the application process.