What does a mortgage broker do?

In this brief guide, we are going to answer the question “what does a mortgage broker do”.

Who is a mortgage broker?

A mortgage broker is a person or entity who works as the intermediary between you and the mortgage lenders to find the best mortgage deal which best suits your personal circumstances.

Before doing any work for you, a mortgage broker must provide you with their initial disclosure document which lists what they offer their costs, the mortgage panel they work with etc

You will usually need to sign that you have seen the initial disclosure document and agreed to its terms before the mortgage broker can do any work on your behalf.

What does a mortgage broker do?

A mortgage broker will do a lot of things but the primary goal of a mortgage broker is to help you get a mortgage on a property you are trying to buy.

Conduct a mortgage fact find

Apply for  your mortgage in principle

Apply for your mortgage offer

Liaison with the mortgage underwriter

Help you find a conveyancer

Liaison with your conveyancer

Help you find mortgage protection

Help you find home insurance

Remind or contact you when you can remortgage

Conduct a mortgage fact find

A mortgage broker will provide you with a mortgage fact find once as the first point of call once you have signed up with one.

The mortgage fact find is a questionnaire which allows the mortgage broker to get an understanding of your personal circumstances and begin to tailor down what your mortgage options may be and where you may need to do some work to present the best mortgage case to the lender.

A mortgage fact find will usually ask you about your income, your expenses, the type of mortgage you want,  your future plans and your current circumstances

Apply for  your mortgage in principle

One of the main things a mortgage broker will do is help you obtain a mortgage in principle. 

A mortgage in principle is a document which gives an indication of what the mortgage lender is willing to lend to you. Having a mortgage in principle will make you look more worthy in the eyes of home sellers as this will be the first indication that you are a serious buyer and you may be able to afford a mortgage.

Once you signup to a mortgage broker, they will have conducted a mortgage fact find, as mentioned above. This information is then used to apply for a mortgage in principle.

The mortgage broker will usually fill in the mortgage in principle application form for you after recommending a particular lender to you.

You will then have to give your consent before the mortgage in principle application is made.

Apply for your mortgage offer

The main thing a mortgage broker will do for you is making your mortgage application.  Once you have had a mortgage in principle from a particular mortgage lender, the mortgage broker will usually then make a mortgage application for you in order to get a mortgage offer from the mortgage lender.

This is usually done once you are sure that you are ready to buy a house.

Liaison with the mortgage underwriter

In some cases, the mortgage broker will have to support additional documents and liaison with the mortgage underwriter once a mortgage application has been submitted in order to get a mortgage offer.

This will usually be the case when the mortgage borrowers circumstances are more complicated e.g a self-employed borrower, a borrower with bad credit or a borrower with complex income.

Specialist mortgage brokers such as bad credit mortgage brokers, shared ownership mortgage brokers etc who already have established relationships with the mortgage underwriters may be very valuable at this stage as they will have the experience of how to present the mortgage application as well as being able to leverage their relationships with the mortgage underwriters in order to get a mortgage offer.

Help you find a conveyancer

Some mortgage brokers will help you find a conveyancer who the mortgage lender will be happy to work with as they are on the mortgage lenders approved panel or similar.

The conveyancing process when buying a house can be very complicated and take a lot of time.

Fiding a good conveyancer may help you have a much faster conveyancing process when buying and a mortgage broker will usually have experience on which conveyancers are fast and good at their jobs and which aren’t.

Liaison with your conveyancer

Another thing a mortgage broker will have to do is liaison with the conveyancer in order to ensure the conveyancing process runs smoothly and any questions which need to be answered are answered in the most efficient manner with little delay.

Help you find mortgage protection

Some mortgage brokers will also help you find mortgage protection which will help you if you become ill or lose your job and are unable to make your monthly mortgage repayments.

You are not obliged to buy the mortgage protection being recommended from your mortgage broker. In fact, you can buy mortgage protection from any other insurance broker.

Help you find home insurance

A mortgage broker may usually also help you find home insurance which you will need as a requirement from most mortgage lenders before completing on the home purchase.

Remind or contact you when you can remortgage

Once you have completed your home purchase, your relationship with your mortgage broker need not end.

In some cases, a mortgage broker will also look to remind you when you can remortgage at the end of a fixed-rate mortgage deal or an introductory mortgage deal.

What to consider when looking for a mortgage broker?

When looking for a mortgage broker you should consider the below points.

Is the mortgage broker regulated by the FCA?

If the mortgage broker is not FCA regulated then they may not be regulated to provide mortgage advice and you may not have any regulatory help if you are mis-sold a mortgage.

Does the mortgage broker have liability insurance?

A mortgage broker which has liability insurance will mean that if you are mis-sold the mortgage you could possibly get some compensation. 

All regulated mortgage brokers are required to have liability insurance.

Is the mortgage broker a whole of market broker or do they have a limited panel?

When picking out a mortgage broker you may prefer a whole of the market mortgage broker who has access to mortgage products from the whole of the market rather than just a selective few mortgage products.

Does the mortgage broker have any exclusive deals from mortgage packagers?

Some mortgage brokers will have exclusive deals from mortgage packages which you may not be able to find if you go directly to the mortgage lender.

Does the mortgage broker have existing relationships with good conveyancers?

A good conveyancer could be the difference between completing your house purchase in 4 weeks or 3 months.

As mortgage brokers have a lot of contact with conveyancers, they may already have establishes relationships with very good conveyancers who they may be willing to recommend to you.

Does the mortgage broker use technology?

Mortgage brokers who do not use up to date technology may be much slower and may not offer you sufficient advice.

The fees charged by the mortgage broker?

Before signing up to the mortgage broker you should always inquire what sort of mortgage fees the mortgage broker charges.

The benefits of using a mortgage broker

Speed of mortgage brokering

One of the main benefits of using a mortgage broker than applying for a mortgage by yourself is that the mortgage broker will have a lot of experience and be able to perform their duties with much more speed than you would be able to.

Exclusive mortgage deals

Another benefit of using a mortgage broker is that some mortgage brokers will have access to exclusive mortgage deals from mortgage packagers or mortgage clubs.

Experience in niche sectors e.g self-employed or bad credit

Specialist mortgage brokers such as shared ownership mortgage brokers, bad credit mortgage brokers or self-employed mortgage brokers may have much more niche knowledge than you would on the subject matter and be able to help you if your mortgage case requires specialist knowledge.

Regulated by the FCA

All mortgage brokers who deal with residential mortgages have to be registered with the Financial conduct authority (FCA). 

This means they must treat customers fairly.

If a mortgage broker does not treat you fairly, you can report the mortgage broker to the FCA if your complaint to the mortgage broker wasn’t sufficiently dealt with and you are not happy with the mortgage brokers final outcome on the complaint.

Professional liability insurance

By having professional liability insurance the mortgage broker will be able to pay compensation to any customers it caused a loss due to negligent behaviour.

In this brief guide, we are going to answer the question “what does a mortgage broker do”. If you have any comments or questions please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.