mortgage brokers, what do they do?

AshleyC

AshleyC

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Ok just trying to sort out a mortgage for a property and have gone through a mortgage broker. After speaking to them yesterday and going through all the details it just seems like they don't do anything more than i would do online going through price comparison sites.

This is my first home so there is a lot of naivety on my part i guess, but i just assumed a mortgage broker would have some sort of influence over the lender in getting a mortgage approved or some way of getting a better rate that i would get myself. But no, they just seem to fill in the forms i would fill in and hit the submit button on my behalf. Thankfully they're not charging me a fee, they get it from the lender apparently. Am i missing something important about their role?
 
As far as I am concerned, a mortgage broker is about as much use as an outside loo on an Airbus.
When we bought our first and only house, the guy steered us towards an endowment mortgage, told us how bad repayment mortgages were, totally convinced us, and we were not alone.
In fact, I think the only reason mortgage advisors exist is to try to sell people endowment mortgages.
Fifteen years ago, I managed to do the whole lot online, changing lenders and remortgaging, saving myself a lot of money as well.
 
If you have equity and good credit and are buying a normal property then a mortage broker is unlikely to be of much use. But if you are low on equity, am buing someting outside the norm, or have credit issues they can access deals you would not be able to.
 
I think there must be good and bad ones. Luckily I seem to have a good one now. Thanks to him I am now pure repayment and after a good few years of hopping from tracker to tracker to stay with the best deals Im now on a lifetime tracker that I can overpay each month as much as I want and pay off anytime I want with no penalty (if only I had the money). Theres no way I could have found deals as good as that on my own. The first broker I saw, back in the mid 90's, sure enough put me on an endowment.
 
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cambsno said:
If you have equity and good credit and are buying a normal property then a mortage broker is unlikely to be of much use. But if you are low on equity, am buing someting outside the norm, or have credit issues they can access deals you would not be able to.
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That's pretty much it. Plenty of cases where going to a price comparison site is not helpful. I've certainly known self-employed people struggle where they don't have three years' accounts, for example.

A (good) broker will be able to direct people to lenders / products that are more likely to be suitable and have access to broker-only products. I'm on straightforward PAYE, have a good credit history and low LTV so have no need of a broker, others have more complicated circumstances and that is where a broker can make the difference.
 
Endowments looked good at the time they were being recommended, just because things change, doesn't mean it wasn't good advice at the time.
 
If you have good credit and are buying a normal residential property you don't need a broker. If however you have non standard income sources, credit problems, are buying a quirky residential property or commercial property then you will find a good broker invaluable.
Some people also like dealing with a person rather than a call centre. You'll also find that a good broker will know exactly where to place a loan and minimise the stress of an application.
The days of brokers selling endowment purely for mortgages have long gone!
 
Brokers have their uses but sometimes if you are an off the shelf buyer then maybe not for you.
 
KitsuneAndy said:
Endowments looked good at the time they were being recommended, just because things change, doesn't mean it wasn't good advice at the time.
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My parents got back three times the amount they borrowed when their endowment on their first house finished after 25 years. They were very good if you took them out in the 1960s, and MIRAS made them better as well.

When I took out my first mortgage in 1996, I insisted on repayment, though lenders were still keen on endowments even then.
 
AshleyC said:
Ok just trying to sort out a mortgage for a property and have gone through a mortgage broker. After speaking to them yesterday and going through all the details it just seems like they don't do anything more than i would do online going through price comparison sites.

This is my first home so there is a lot of naivety on my part i guess, but i just assumed a mortgage broker would have some sort of influence over the lender in getting a mortgage approved or some way of getting a better rate that i would get myself. But no, they just seem to fill in the forms i would fill in and hit the submit button on my behalf. Thankfully they're not charging me a fee, they get it from the lender apparently. Am i missing something important about their role?
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Hi Ashley, if you haven't already done so this is a fairly helpful and impartial guide written by Martin Lewis (Money Saving Expert) http://images6.moneysavingexpert.com/images/documents/FTBGuide2017-v2.pdf

Also you should check whether you are receiving Advice from your Mortgage Broker or not. This distinction is very important, because if you are receiving Advice then the Mortgage Broker needs to assess your circumstances and advise you on a suitable mortgage product that fits your needs and level of uncertainty relating to the term and interest rate risk that you are wiling to take. By the sounds of it and based on how your Broker is being remunerated (i.e. a commission from the lender) he or she is not giving you Advice and may just be facilitating the process. Whilst there is nothing wrong with that, you wont receive advise on whether a mortgage is suitable for your circumstances, which for a first time buyer (assuming you're relatively new to mortgages) is quite important.

I'm not a qualified mortgage adviser but I am reasonably financially savvy (7+ years as a Risk Manager) and would be happy to answer any questions you might have. I bought a house myself last year and found the whole process daunting and confusing.
 
KitsuneAndy said:
Endowments looked good at the time they were being recommended, just because things change, doesn't mean it wasn't good advice at the time.
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Our mortgage became due last tear and the endowment taken out in 1999 provided several thousands over the mortgage amount.
 
We also used one for our first house because we were advised it was the best thing to do and being first time buyers, our experience was virtually zero with this sort of stuff.

Once I realised he literally submitted the form on our behalf and actually delayed the process when the lender wanted more information and then it took them 2-3 days to actually get it to them, I vowed never to use one again unless I had no other choice.

With the evolution of technology, the mortgage broker is not longer a requirement unless you have complicated circumstances.

I just remortaged and it was a breeze, filled out a form, provided the documents they wanted and was done within a few weeks.

My Grandparents swear by them, they even know theirs personally but equally they own Sony Ericsson mobile which is about 15 years old so I can see why they feel they need help.

Fast forward 20 years and I reckon most folk will be doing their entire mortgage process online.
 
DorsetDude said:
:jawdrop:

There's hope for us yet.
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I turned my mortgage into a repayment when it went from being 18 months ahead to 6 months behind in a year. it was more expensive, but I started overpaying it and paid it off 4 years early. If I hadn't done that, at the time, it wouldn't have paid off the final amount due, but then mine was running from 1985
 
Byker28i said:
I turned my mortgage into a repayment when it went from being 18 months ahead to 6 months behind in a year. it was more expensive, but I started overpaying it and paid it off 4 years early. If I hadn't done that, at the time, it wouldn't have paid off the final amount due, but then mine was running from 1985
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I did something similar, I took out an endowment backed mortgage about 20 years ago, after about 7 years I think I got a letter saying I had been missold and it wasn't going to cover so I was advised to cash it in and converted to a repayment. I did get a reasonable amount back and then a few years later I got some extra money from a legal complaint. I have to say it worked out better for me as then I switched to a tracker with the Yorks Bank and mega overpaid when interest rates tumbled. I have been mortgage free since turning 45
 
My mortgage broker guy made everything very smooth and I was able to borrow more than I would have via going direct.
 
I use a broker who specialises in mortgages for the self employed and he was great.
All I had to provide were two year tax certificates and answered some financial questions. A few days later he had me a mortgage that I would never have got on the high street. He wasn’t cheap but got the job done with little fuss.

I went through a broker because the high street lenders are making it very difficult for the self employed to get a mortgage but I would never have used one if I was employed with regular pay slips.
 
Well its all gone through, mortgage accepted and it seems a decent deal. Locked for three years instead of two as I think we will be in the stink in a couple of years time due to brexit.

So that's that. On the ladder. A little late in life but about time too I think.
 
You be right in 3 years there might be 1 more % on interest rates I reckon maybe 2 max
 
andy700 said:
As far as I am concerned, a mortgage broker is about as much use as an outside loo on an Airbus.
When we bought our first and only house, the guy steered us towards an endowment mortgage, told us how bad repayment mortgages were, totally convinced us, and we were not alone.
In fact, I think the only reason mortgage advisors exist is to try to sell people endowment mortgages.
Fifteen years ago, I managed to do the whole lot online, changing lenders and remortgaging, saving myself a lot of money as well.
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Endowments what a scam that turned out to be! people paid more than an ordinary repayment mortgage in the belief they would have their house paid off and a lump sum of many thousands to spend. What did they get! not enough money in the endowment and a shortfall in the funds to pay for the property and a bill for may thousnads of pounds or we take your house. The people that sold them should have been prosecuted.LOL
 
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KitsuneAndy said:
Endowments looked good at the time they were being recommended, just because things change, doesn't mean it wasn't good advice at the time.
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Er yes it does. These people are professionals and are there to give the correct advice. Many of if not most did not give the correct advice because the got a massive commission for selling the endowment. Hence the scandal and the claims that were made after the event. They were at best negligent and at worst corupt. The whole finacial system is bent it has been since Thatchers deregulation.

http://www.telegraph.co.uk/finance/...owment-mis-selling-is-a-national-scandal.html
 
Went through a broker for a bit during the run up to buying.
I sorta knew what the market was through research but thought I'd let them find us a better deal than the obvious, ya know...with them being in the industry you'd expect them to be expert at doing a deal.
Over the course of a month they sent me a dozen offers from various lenders, non of which came close to the deals any idiot could find with 5 minutes and the internet.
Absolute waste of time, so much time in fact that we ran out of it and I had to go get it myself.
5 years later, its still ridiculously competitive straight off the high street, not that the market has changed much in 5 years, but still, absolutely no value in swapping at this time.
 
shapeshifter said:
Er yes it does. These people are professionals and are there to give the correct advice. Many of if not most did not give the correct advice because the got a massive commission for selling the endowment. Hence the scandal and the claims that were made after the event. They were at best negligent and at worst corupt. The whole finacial system is bent it has been since Thatchers deregulation.

http://www.telegraph.co.uk/finance/...owment-mis-selling-is-a-national-scandal.html
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Our first mortgage was with the Abbey National and the endowment through Scottish Amicable. I cannot remember exactly when we received a letter from Scottish Amicable, but it bluntly said that the endowment would not pay off the mortgage judging by its current performance, so I had two options - increase the payments on the policy or extend the term of the endowment.
So, I took the third option (not mentioned by them) and cashed it in (didn't lose anything really), then switched over to a repayment mortgage with another lender. The result was lower monthly payments and peace of mind. We paid it off earlier this year and have the millstone that is a mortgage, totally removed from our lives.
 
ecoleman said:
I use a broker who specialises in mortgages for the self employed and he was great.
All I had to provide were two year tax certificates and answered some financial questions. A few days later he had me a mortgage that I would never have got on the high street. He wasn’t cheap but got the job done with little fuss.

I went through a broker because the high street lenders are making it very difficult for the self employed to get a mortgage but I would never have used one if I was employed with regular pay slips.
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(y) Almost exactly the same for us a few months ago.
(being self employed isn't quite so straight forward)
 
Our first purchase almost went tits up as Northern Rock went back on their Agreement in Principle at the 11th hour. Our mortgage broker put in a load of work and got it all swiftly resolved, with an alternative lender.
 
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Mortgage is a dirty word in my house - can't bloody wait until it's paid off. If I let it run to full term I could have bought another house exactly the same from the interest payments!
 
hsuffyan said:
Hi Ashley, if you haven't already done so this is a fairly helpful and impartial guide written by Martin Lewis (Money Saving Expert) http://images6.moneysavingexpert.com/images/documents/FTBGuide2017-v2.pdf

Also you should check whether you are receiving Advice from your Mortgage Broker or not. This distinction is very important, because if you are receiving Advice then the Mortgage Broker needs to assess your circumstances and advise you on a suitable mortgage product that fits your needs and level of uncertainty relating to the term and interest rate risk that you are wiling to take. By the sounds of it and based on how your Broker is being remunerated (i.e. a commission from the lender) he or she is not giving you Advice and may just be facilitating the process. Whilst there is nothing wrong with that, you wont receive advise on whether a mortgage is suitable for your circumstances, which for a first time buyer (assuming you're relatively new to mortgages) is quite important.

I'm not a qualified mortgage adviser but I am reasonably financially savvy (7+ years as a Risk Manager) and would be happy to answer any questions you might have. I bought a house myself last year and found the whole process daunting and confusing.
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No Longer true as all mortgage brokers in the regulated ( residential) market have to advise you on the mortgage they are offering you. You need to check whether it is on a limited panel of lenders or on a whole of market basis.
 
Used one to buy our house a few years ago (First time buyer). He was brilliant.
He did absolutely everything from finding the best mortgage deal for us, to finding us life insurance, house insurance, a decent solicitor.
He was upfront about everything (He knew the solicitor and explained our options if we weren't comfortable with that).
 
shapeshifter said:
Er yes it does. These people are professionals and are there to give the correct advice. Many of if not most did not give the correct advice because the got a massive commission for selling the endowment. Hence the scandal and the claims that were made after the event. They were at best negligent and at worst corupt. The whole finacial system is bent it has been since Thatchers deregulation.

http://www.telegraph.co.uk/finance/...owment-mis-selling-is-a-national-scandal.html
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Some people mis-selling endowments does not mean all endowments were a bad investment. Especially as there were Guaranteed Endowments on the market as well.

There was probably also a bit of the customer not understanding that they had a product that wasn't guaranteed to pay off the mortgage, and the adviser not having evidence that they did explain it.

Easy to offer the right product with hindsight, but investment products always come with a bit of uncertainty.
 
KitsuneAndy said:
Some people mis-selling endowments does not mean all endowments were a bad investment. Especially as there were Guaranteed Endowments on the market as well.

There was probably also a bit of the customer not understanding that they had a product that wasn't guaranteed to pay off the mortgage, and the adviser not having evidence that they did explain it.

Easy to offer the right product with hindsight, but investment products always come with a bit of uncertainty.
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Yes, I don't remember getting any complaints when I delivered maturity cheques for 2 to 3 times the amount clients had paid in over 10 years. However having worked in the industry I wouldn't trust any of them. I was the exception
 
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KitsuneAndy said:
Some people mis-selling endowments does not mean all endowments were a bad investment. Especially as there were Guaranteed Endowments on the market as well.

There was probably also a bit of the customer not understanding that they had a product that wasn't guaranteed to pay off the mortgage, and the adviser not having evidence that they did explain it.

Easy to offer the right product with hindsight, but investment products always come with a bit of uncertainty.
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Where did the money go. One man pays £100 a month for a repayment mortgage on his house. Another pays £110 for an endowment mortgage on his house yet the man who paid the most money ends up having to find another £10,000 to pay the debt of because the endowment is short. Where did the money go? did it just vanish into thin air? No it's in someones pocket. Not an investment at all 100% con. You pay them the money and they then give you back what they like.

People need to wise up and stop kidding themselves.When you hear these quite words " oh! by the way they can go down as well as up but in the past it has been very rare".That's the con, run a mile.
 
shapeshifter said:
Where did the money go. One man pays £100 a month for a repayment mortgage on his house. Another pays £110 for an endowment mortgage on his house yet the man who paid the most money ends up having to find another £10,000 to pay the debt of because the endowment is short. Where did the money go? did it just vanish into thin air? No it's in someones pocket. Not an investment at all 100% con. You pay them the money and they then give you back what they like.

People need to wise up and stop kidding themselves.When you hear these quite words " oh! by the way they can go down as well as up but in the past it has been very rare".That's the con, run a mile.
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The money was never there, the return is based on an assumed level of "bonus" which is added to the pot based on the performance of the underlying with-profits fund. If the investments don't do very well, then the final bonus might not meet what was predicted.

How many endowment investments actually lost money? The complaints were that they didn't grow as much as expected, and they weren't told it might not meet the value of their mortgage. Which is a fair enough complaint if it wasn't explained, but it doesn't mean anyone has taken their money, they probably still made a decent profit, just not as much as they expected to.

There were also Guaranteed Endowment policies, which would have required a higher payment going in but would be guaranteed to reach a specified value. And the bonus would all be extra cash on top of it.

Just because you don't understand how it works, doesn't mean it's a con.
 
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I think the problem with endowment mortgages was that people thought a profit was guaranteed.
Worked with someone that was always going on about how much they would make.

Asked them where it said it was a definite, usually use terms such as expect to, you should etc etc never you will
We had a repayment mortgage from day one back in 1989, no idea what we paid over the 25 years, but now own the house outright and that will do thank you.

Must say these interest only mortgages look a bit grim, do wonder where some will (or not) find the capital at the end of the term
 
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tijuana taxi said:
I think the problem with endowment mortgages was that people thought a profit was guaranteed.
Worked with someone that was always going on about how much they would make.

Asked them where it said it was a definite, usually use terms such as expect to, you should etc etc never you will
We had a repayment mortgage from day one back in 1989, no idea what we paid over the 25 years, but now own the house outright and that will do thank you.

Must say these interest only mortgages look a bit grim, do wonder where some will (or not) find the capital at the end of the term
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I know someone who has a house on interest only because it's cheaper then rent, with the plan to sell it at the end of the term pocket the profit and move into a rental for their retirement..
 
KitsuneAndy said:
I know someone who has a house on interest only because it's cheaper then rent, with the plan to sell it at the end of the term pocket the profit and move into a rental for their retirement..
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Just hope they have predicted the housing market correctly otherwise its a long cold retirement, bit of a gamble.
No guarantee and that takes us back to endowments, sure some of those people had plans for the bonus cash
 
tijuana taxi said:
Just hope they have predicted the housing market correctly otherwise its a long cold retirement, bit of a gamble.
No guarantee and that takes us back to endowments, sure some of those people had plans for the bonus cash
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quite possibly, but no different to staying in a rental property anyway I guess.

Not something I'd want to do though!
 
shapeshifter said:
Where did the money go. One man pays £100 a month for a repayment mortgage on his house. Another pays £110 for an endowment mortgage on his house yet the man who paid the most money ends up having to find another £10,000 to pay the debt of because the endowment is short. Where did the money go? did it just vanish into thin air? No it's in someones pocket. Not an investment at all 100% con. You pay them the money and they then give you back what they like.
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When I was offered an endowment mortgage the payments were lower than for a repayment mortgage for the same amount, not higher.

Do you understand how an endowment mortgage works? You post like you don't.
 
KitsuneAndy said:
I know someone who has a house on interest only because it's cheaper then rent, with the plan to sell it at the end of the term pocket the profit and move into a rental for their retirement..
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It’s a gamble not knowing what the rental market will be a decade or two from now. I don’t doubt that the property will increase in value but it’ll also be relative to inflation.

The last thing I want is to be in a situation in my later years where I can be shifted from pillar to post in rental properties because I have no control over whether I can stay long term or not. I’ve been a landlord and will be again when I’ve built my house but I won’t be buying with a mortgage, I’ll be buying with the money I’m currently paying for my mortgage.

Your mates strategy sends shivers down my spine but each to their own and whilstever there are people wanting to rent then I’ll make sure I have properties for them to rent - pay me the interest instead of the banks!
 
We went to a mortgage advisor to remortgage as our deal came to an end, he sorted lots of paperwork for us but we decided to go direct ourselves. In the end we got a batter deal with our current lender than he could offer. The difference in rates was about 0.3% cheaper to go direct. It was a bit of hassle but got it sorted in around 2-3 weeks and it's all gone through now.
 
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