Bank Vs Broker: Part 2
In this second part of our Bank Vs Broker podcast episode, Amy Wilson continues to explain the differences between using a bank Mortgage Adviser and a Mortgage Broker.
So you’ve met with the Mortgage Broker, what happens next?
After the 1 to 1.5 hour meeting, your broker will go away to research lots of lenders and products on your behalf. A little while later they come back with product recommendations, explaining what they like about each option. This might include:
- the terms and conditions of the mortgage
- monthly payments
- interest rate
- incentives like cashback/ free valuation
- Things to be aware of e.g. early repayment charges on a fixed-rate.
Will a broker offer different types of products compared to a bank?
Whichever route you choose you will still have a choice of the same types of product – fixed-rate mortgages, trackers, discount mortgages, etc.
With a broker, you are more likely to find more specialist products. For example, some lenders out there offer special rates for doctors, solicitors, and other types of professional jobs. These wouldn’t be available from a bank.
But won’t I get preferential products from my bank if I’ve been a customer for years?
In the past, there were some loyalty deals for a bank’s customers – but these weren’t linked to how long they had held an account with the bank. They were only available to people who held mortgages.
The products on offer from a bank aren’t particularly tailored to certain customers. Instead, they tend to be typical types of mortgages: fixed, tracker, offset, etc.
You will also need to fit the criteria for each mortgage. You won’t get any special treatment as a loyal banking customer. And because a bank will only have a certain set of products, if you don’t match the lending criteria, it may not be possible to find you a suitable product.
Meanwhile, a broker will have access to many more lenders and different products, so it’s more likely that they will find you something to help you buy a home.
Who could benefit from talking to a broker?
Brokers can often provide good support for people in more unusual situations: being self-employed, having bad credit, or facing high mortgage rates because of their situation.
A broker will do a lot of ‘shopping around’ as you would for a mobile phone, car insurance etc. Shopping around could save people a lot of money over the 25 or 30 years they have their mortgage.
Are there other advantages of using a broker?
A broker will keep on looking out for you, while a bank might not. We find that many people are on their lender’s standard variable rates because they hadn’t realised that once your fixed-rate ends you can switch to another one that is cheaper.
People can save thousands by doing that – and it’s not as complicated as you think when you have a broker to do it for you.
Another way that brokers can help is by being more involved in the whole home purchase journey. Because a broker is so experienced in property buying they can help you negotiate offers with the estate agent, talk about the house and the improvements you might make… it’s a one-to-one relationship – we’re involved from start to finish.
But doesn’t a Mortgage Broker charge a fee, while banks are free?
Absolutely – a bank doesn’t charge for the advice from the Mortgage Advisor. But a broker offers end-to-end service – even helping clients to find homes for viewings that match their requirements.
We will negotiate on price with the seller, we can save you thousands on a mortgage offer, doing the mortgage application for you and chasing up solicitors, lenders, and anyone else to move the property purchase to completion.
A broker understands that nobody is excited about a mortgage, they’re excited about the house and the lifestyle that they are getting for themselves. And most brokers love to help make those dreams come true.