Guide To Mortgage Advisers
We will explain what a mortgage adviser is, how they earn a living, how they can help you, what to look out for and where you can find one.
Why Talk To A Mortgage Adviser?
There are many reasons why talking to a mortgage adviser is a smart move. Here are five of the biggest:
- You'll save money. Advisers will often have access to mortgage deals not available on the high street or over the internet. This is because they have a trusted relationship with lenders which they have earned through countless other deals. As a result you can take advantage of this situation and save yourself a lot of money. A recent study discovered that those people who used a mortgage adviser could save up to £1,830 per year on their repayments, with an average saving of £962.
- No Hassle. Why bother spending precious time trawling over the internet or walking up and down the high street to look for the best mortgage deal when an adviser has already done the leg work for you? Even if you decide to look for yourself you won't have access to adviser-only deals.
- Knowledge is power. You adviser will be able to give you a detailed breakdown of your mortgage contract to highlight exactly where your money is being spent. They will also be able to translate any financial jargon in the small print into real costs or benefits that you can understand.
- Customisation. If you've ever had a suit tailored you will understand the benefits of a perfect fit. The same can be said about your mortgage, choosing the deal which suits your own individual circumstances is the smart thing to do. An adviser will help you navigate the market and locate the perfect fit for you.
- Reassurance. Taking out a mortgage will probably be the largest financial commitment you'll ever undertake. Having an adviser will help you from feeling overwhelmed or confused. You'll be able to sleep stress-free at night knowing that you have the right deal.
- Save Money. Save up to a massive £1,830 every single year on your repayments by enlisting the services of a mortgage adviser.
- Save Time. A professional adviser has already trawled through the thousands of current mortgage offerings and will know the best deal for you.
- Save Stress. Knowing that a mortgage adviser has found you the best mortgage deal will save you the stress that comes with taking out a loan. They will also be able to translate any hidden small print into tangible terms to help you understand how your repayments could be affected.
- Financial Control. An adviser will be able to compare mortgage deals and find the right match for your current financial situation. Retain control over possibly the largest financial commitment in your life.
So What Will My Adviser Do For Me?
- Find the best mortgage deals which suit your current circumstances from the many thousands that are on offer from different lenders.
- Present a list of suitable contracts and offer comparisons to help you make a decision.
- Deal with any required paperwork
- Monitor the progress of your application and make sure that all parties are doing what they are supposed to.
- Advise you on any re-mortgaging matters if your circumstances change in the future.
- Give advice on any other financial matters such as tax, investment and insurance.
Types Of Advisers
There are different types of advisers able to give you professional advice:
- Agents. Both tied and multi-tied agents are employed by banks, building societies and loan providers to provide information to customers on the current products their company can offer. Therefore they can only sell a limited range of products and will not be able to give financial advice or an overview of the current market. If you have decided to choose a specific mortgage from a specific lender you should speak with their agents as they will be able to give you the complete product details.
- Mortgage Brokers. Mortgage Brokers can provide advice on a large range of mortgage deals. Some will compare the entire market whilst others will have business relationships with a smaller number of lenders. If you are after the best deal you should speak with a mortgage adviser as you will be offered the most impartial advice. Many will also be able to assist you with other products such as mortgage payment protection insurance (MPPI), building and contents insurance. Advisers either charge a fee or receive a commission from the lender for the services they provide. There are many different companies offering mortgage advice from one-man to international agencies.
- Independent Financial Advisers / IFAs. If you want unbiased advice on a range of financial matters you should speak with an IFA. They will be able to give you information regarding life insurance, tax advice, investments, loans and insolvency issues. IFAs generally offer two types of payment, either a fixed fee for services or commission structure with the provider. In the case of a mix the fee is typically deducted from the commission.
How Does The Advice Process Work?
After you contact an adviser you will be given an Initial Disclosure Document (IDD). This document will outline the details regarding their mortgage services, including:
- An introduction to the adviser and the company they work for.
- The types of services the adviser can offer.
- Explains if they are able to provide advice or only information.
- Details the number of lenders they search through in order to find you the best mortgage deal.
- Outlines any commission they may receive from setting up a deal with a lender.
- States any fees they may charge and if they are refundable.
If you still require further information after receiving the IDD from the adviser you should take a look at their website or ask your adviser.
Your adviser will ask you a series of questions in order to discover your financial situation, employment and what you are looking for in a mortgage. After you have completed an application form your adviser will research the market and then submit loan applications to those which are most suitable. First time buyers may find this service helps remove some of the stress in the application process.
The adviser will then prepare a Key Facts Illustration document which will contain details of the mortgages they have believe suitable for you. This document will allow you to compare one or more loans against the following criteria:
- Overall cost of the mortgage.
- Interest rate, term and any early repayment charges.
- Monthly repayments.
- Annual percentage rate (APR) and interest rate.
- Overpayment penalties.
- Survey costs.
- Information required when selling the property.
- Fees payable to the lender or adviser.
Most of the time your adviser will want to meet with you face-to-face at a time and place which is convenient for you. If your application is fairly straightforward it may be possible to conduct the required application and discussion with online or over the phone.
Why Do I need An Adviser?
Simply put you won't have the same access to the best mortgage rates. Advisers have access to computer systems which monitor the current 5,000 or so products on offer from over many different lenders. Each lender will have access to what is known as an intermediary channel - a group of mortgage deals reserved exclusively for brokers. These deals are not available on the high street or over the internet. They will assess your mortgage desires and current financial situation and match you with the best possible deal - perhaps from a specialist lender you haven't heard of before.
Despite the abundance of information on the internet it's often difficult to make sense of the terminology in a mortgage contract. An adviser will be able to translate these complex clauses into regular English - enabling you to make decisions based on a clear understanding of all the facts. They will be able to save you thousands of pounds during the lifetime of your loan.
Complete our online form and be put in contact with a qualified mortgage broker in your local area who will be happy to guide you through the mortgage searching and application process.
Other Advantages Of Using An Adviser
Apart from saving time and money there are many other reasons why talking to an adviser is a smarter choice than going direct to a lender:
- A personal service
- Advice throughout the application process
- Fast turnaround if you need a mortgage quickly
- Flexibility when considering your application - many lenders simply consider your income
- Help in getting a mortgage if you have poor credit
- Access to the best deals
- Some lenders only deal with mortgage brokers - therefore in order to gain access to those deals you need an adviser!
What If I Have Poor Credit Or Self Employed?
Speak to an adviser - they will have relationships with lenders who are able to grant mortgages to individuals with unusual circumstances.
If you are self-employed you may struggle to find the best mortgage deal by yourself. An adviser will be able to search the whole market, including the intermediary channels, to find you the best possible deal for your circumstances.
Due to the credit crunch fewer mortgage applications are being approved. In this competitive and stressful financial period speaking with an adviser is the smart thing to do. They will be able to assess your circumstances and locate you an affordable self-cert or sub-prime mortgage.
What Should I Ask My Adviser?
When you first speak with an adviser you should ask them the following questions:
- Are you an employee or an independent financial adviser?
- What qualifications do you have? Ideally your adviser should possess a Certificate of Mortgage Advice and Practice (CeMAP) and Mortgage Advice Qualification (MAQ).
- How many lenders do you search, is it the whole market, or a smaller group? An adviser may search a smaller number of lenders as they have a long standing relationship and are confident that they have the best deals available.
- How do you calculate your fees, as a fixed fee, percentage or mixture of both? If the adviser charges a flat fee you are better placed to receive unbiased advice as there is no incentive for the adviser to recommend a lender who simply offers them greater commission.
- What fees, if any, do I need to pay the lender?
- Are any fees refundable?
- Are you able to give advice on additional financial products such as building and contents insurance, mortgage payment protection (MMPI) or critical illness insurance? Again, do you search the whole market or use a limited group of providers?
Make sure that you are comfortable with your adviser and that they are interested in your application.
How Do I Know If I'm Receiving Good Advice?
Each adviser needs to pass several exams and should hold a Mortgage Advice Qualification (MAQ) and have a Certificate Of Mortgage Advice And Practice (CeMAP). They are duty-bound to treat you fairly and to give you the best possible advice. They are also required to provide you with sufficient information so that you can make an informed decision. You can check your adviser is able to give advice by checking the financial adviser register.
In the unlikely event you feel your adviser has been unprofessional you should report the potential breach of contract to the Financial Ombudsman. The adviser could then be given a formal warning, fined, have their business suspended or in exceptional instances be sent to prison. You may also be entitled to some form of compensation.
What Information Will My Adviser Need?
Generally speaking you will need to give an adviser the same information as you would a lender. This can include:
- Your name - confirmed by perhaps your driving licence or passport,
- Your current address - confirmed by a utility bill or council tax statement.
- Landlord or lender details from the previous 3 years.
- Employment details.
- Income details - perhaps wage slips, P60 or bank statements from the previous 6 months
- Details of any outstanding debts.
- Details of the desired property.
How Much Does Mortgage Advice Cost?
Any fees you may have to pay to an adviser largely depend on the complexity of the mortgage and the amount of advice you need.
A typical fee for mortgage advice is somewhere between £200-£300 or a percentage of the loan size, around 0.3%-1.5%. Some lenders offer a lifetime fee which entitles you to as much advice as you need for one single payment. This becomes even more relevant if you intend to re-mortgage in the future.
Some brokers will refund their fees if you take a mortgage on their recommendation. They are able to this as they will receive a commission from the lender. You should ask an adviser how much commission they will receive from a lender so you can gauge if their fee is fair.
The thing to remember is that a mortgage adviser can save you many thousands over the lifetime of your loan - a fraction of any advice fee. Speaking with an adviser is the smarter move.
How Do I Find An Adviser?
With over 12,000 registered advisers in the UK trying to find the right one for your situation can be as daunting as finding a mortgage!
Thankfully we make this process a lot easier. Simply complete our short online form and you will be put in contact with a professional adviser who will be able to give you the best advice.