Articles - Lenders vs Mortgage
Brokers
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When looking for a mortgage you may be
faced with a decision as to whether you should use the services
of a mortgage broker instead of applying for a home loan
directly with a lender.
One of the main reasons why you should use a mortgage broker is
that they have access to a much wider range of products than an
individual lender does. Mortgage advisors who work within bank
branches are tied to the products that the bank offers and
cannot advise on products offered by other financial
institutions. This means that tied advisors are not able to
offer advice on the entire mortgage market and are therefore
not independent and unbiased.
Instead those mortgage brokers are usually limited to about a
dozen products, usually with varying interest rates,
loan-to-value ratios, and fees. Apart from the variances in
these factors, the products are mostly the same.
They will usually require the applicant to pass the same set of
criteria, such as credit worthiness, in order to assess whether
they are eligible for a loan. This normally means that
applicants with adverse credit will not be approved and the
lender will not assist them in locating a more suitable
product.
Independent mortgage brokers, on the other hand, may have
access to thousands of products from dozens of different
lenders. This will certainly increase the odds of you finding a
product to suit your individual circumstances, particularly if
you are self-employed or do not have a perfect credit
history.
An independent mortgage broker will have access to software
that will be able to scour the entire UK mortgage market to
find the best product available to suit your individual
needs.
Many niche lenders specialize in providing mortgages for people
who do not qualify for the products offered by mainstream
lenders and they usually prefer to conduct their business
through independent mortgage brokers. This means that you will
not be able to access certain lenders without using the
services of a mortgage broker.
Some larger mortgage brokers are even able to offer exclusive
and semi-exclusive deals. These mortgages are not available on
the open market which means it is always a good idea to contact
at least one major mortgage broker to find out what they have
to offer. Exclusive deals are usually only available for a
limited time and target certain borrowers.
However if you are eligible for a prime mortgage product you
may be able to secure the best deal directly from a lender. If
you apply for a mortgage with a mainstream lender you will be
able to save on mortgage broker fees as you will effectively
cut out the middle man. Ordinarily you will be required to have
a perfect credit file and some equity in your home or a large
deposit.
Therefore, if you are looking to buy a home and need a
mortgage, or if you are looking to remortgage a property you
already own, you will need to asses the two options carefully
and make a decision based upon your personal financial
needs.
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