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5 Ways to Save by Using a Mortgage Broker

Personal_Finance / Mortgages Aug 20, 2019 - 07:35 AM GMT

By: Submissions


Getting a mortgage can be the hardest part of buying a house. You run from lender to lender in hopes of getting pre-approval before you start house hunting. Once you find the house you want to buy, you then have to go through the formal approval process. It can be the stuff of nightmares if you are not hooked up with the right lender.

It turns out that there is a viable alternative to going directly to banks and building societies: turn to a regulated mortgage brokerage instead. A mortgage brokerage is a company that acts as a middleman of sorts, matching lenders and borrowers based on both of their needs.

There are three different kinds of mortgage brokers recognised by UK regulations:

  • Tied – A tied mortgage broker represents only one lender
  • Multi-Tied – A multi-tied mortgage broker represents a limited number of lenders
  • Independent – An independent mortgage broker isn't tied to any specific lenders.

The advantage of working with an independent mortgage brokerage is encapsulated in a single word: choice. The more choices you have as a borrower, the greater the likelihood you are going to get the deal that works best for you.

With all that said, being able to save is the biggest benefit of getting your mortgage through a brokerage. Below are five ways to save.

1. Save Time

There are literally hundreds of different mortgage products on the market at any given time. Common sense dictates that in order for you to get the best deal, you have to look at all of them. You have to be able to compare every mortgage product against all others to determine which one is best. Do you have that kind of time? Most people do not.

A mortgage broker not only has the time, but that is what he or she does for a living. If anyone knows the finer points of all currently available mortgage products, it is the independent mortgage broker who specialises in taking advantage of the full market.

Working with a mortgage broker means you are not spending time comparing dozens of different loan offers. You complete some paperwork and let your broker do the digging. You are presented with a range of the best possible deals to choose from after the broker completes his or her work.

2. Save on Interest

Saving on the amount of interest you pay is the single most important thing you can do to keep your mortgage costs in check. Just a quarter of one percentage point can make a difference of thousands over the life of a mortgage. It should be obvious that you want to pay as little interest as possible.

The thing about banks and building societies is that their advertised rates are not necessarily what consumers get when they sign on the dotted line. In fact, those advertised rates are usually reserved for borrowers with the highest incomes and best credit ratings.

All of this is not to say that you have to settle for a lousy interest rate. You don't. A mortgage broker has access to an extensive list of mortgage deals, some of which offer extremely competitive interest rates. He or she is the most qualified person to dig around until the best interest rate is found.

3. Save on Fees

Hand-in-hand with mortgage interest is the extra fees you pay for the privilege of borrowing. A mortgage broker shines here as well. Just like your broker can dig around to find the best interest rates, he or she can also find mortgages with the lowest fees. This could save you thousands.

4. Save Yourself the Frustration

Working directly with banks and building societies can be a frustrating experience. It is especially frustrating for first-time home buyers who haven't been through the process before. How does a mortgage broker help? By acting as an intermediary between you and your lender.

Your mortgage broker is there to help you avoid the frustration of making mistakes on your paperwork. Your broker can help by clarifying things you do not understand. You will get answers to your questions as well as any assistance you need to satisfy lender needs for documents and forms.

5. Save Yourself from Costly Mistakes

Finally, you can save yourself from making costly mistakes by working with a mortgage broker. Here in the UK, mortgage brokers are also financial advisers with special expertise in the mortgage market. It is part of their responsibility to customers to provide sound financial advice so as to help them avoid making costly mistakes.

In short, your mortgage broker can advise you as to the financial prudence of certain mortgages. He or she can help you understand how a mortgage will affect your short- and long-term finances. The advice from an independent broker is invaluable when it comes to making wise mortgage decisions.

Yes, you can go directly to a bank or building society to get a mortgage. You can also go to a mortgage brokerage. Based on what you've read here, isn't going with a broker the better option?

By Russell Fenton

© 2019 Copyright Russell Fenton - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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