Important Questions to Ask the Mortgage Broker

Queries for a Mortgage Adviser Before Getting Cheap Mortgage Deals

Nov 12, 2009 Rachel Wills

Mortgage brokers make finding mortgage information easy, but it is vital to select the right one via tactical questions or the best mortgage deals will remain elusive.

When shopping around for cheap mortgages, bear in mind that seeking advice from one source such as a bank or building society will yield results only from what is available within that financial institution. It is better to seek a source of information to cover all avenues.

Approaching a Mortgage Broker

Of course, searching the internet is a great way of unearthing bargains. Finding cheap mortgage rates with minimum fees is the key. However, seeking the advice of a reputable mortgage adviser is the preferred option for a number of reasons:

Provides a personal point of contact
Provides expert advice face-to-face
Can explain confusing terminology
Knows the marketplace inside out
Will know which mortgage will best suit the customer
Is regulated by the Financial Services Authority (FSA)

However, before seeking one, a few questions need asking:

Is the Mortgage Broker Whole of Market?

Whole market literally means, “all of the market.” The broker must have all the information on mortgages available, including updates. This is important if the customer is to get the cheapest mortgage deal real time.

Sadly, the FSA started regulating mortgage brokers relatively recently (2004) and left a loophole in this regard, that allows the broker to claim whole of market status, yet the adviser may only need to check what is available every month or so. Within such a fast-moving marketplace, this is insufficient.

With this in mind, the customer may make the question more specific as advised by Money Saving Expert’s article (2009) “Cheap Mortgage Finding,” which is thus: “Could you right now source a mortgage for me from any available UK mortgage lender?” This ensures the customer is able to clarify whether the mortgage broker is able to find the best mortgage provider deal real time.

Does the Broker Charge a Fee?

Brokers earn commission in two ways:

Charging the customer fees on completion (up to 1% of the value of the mortgage)
A procuration fee from the lender, usually of around 0.25% to 0.5% of the value of the mortgage. This will rise to 1% for mortgages sold to those with poor credit rating.
Some mortgage brokers earn from both commission and fees

A whole of market broker who does not charge a fee will save money for the customer, whilst at the same time find a competitive mortgage deal. Another option available to the customer is the mortgage broker’s offer of charging a fee to the customer, and then rebating it once the lender has paid commission to the broker on completion

When to Walk Away from the Mortgage Adviser

The broker should never charge a fee ahead of completion
Fees should never be more than 1%.
If the broker is not regulated by the FSA
If the broker is not properly qualified
If in doubt, it is best to go elsewhere

Is the Mortgage Broker IFA?

With the misselling of endowments rife, the customer may seek advice on an endowment that is under-performing. The broker may offer valuable advice if he or she is an independent financial adviser (IFA).

Cheap Independent Mortgage Advice

A free of charge whole of market mortgage broker is a wise move in finding a cheap mortgage. Strategic questioning will increase the likelihood of the customer finding a suitable loan broker who will help find a mortgage with competitive rates at no or little cost.

Reference: “Cheap Mortgage Finding” (Money Saving Expert, 2009)

The copyright of the article Important Questions to Ask the Mortgage Broker in Mortgages/Loans is owned by Rachel Wills. Permission to republish Important Questions to Ask the Mortgage Broker in print or online must be granted by the author in writing.