What Questions to Ask When Selecting a Mortgage Broker

Selecting the right mortgage advisor is a critical step in your home-buying process. To ensure you make an informed choice, consider asking these key questions:

Are You a Regulated Broker and What Is Your Level of Experience?

In the UK, any mortgage broker dealing with residential properties must have regulation from the Financial Conduct Authority (FCA). You can easily check a broker’s FCA status on their register.

Opting for an unregulated advisor could not only be illegal, but it might also result in advice that’s not only wrong but potentially damaging.

Experience counts for a lot too. Brokers who’ve been in the game longer usually bring a wealth of knowledge about the various mortgage options available.

What Type of Broker Are You?

Mortgage brokers in the UK generally fall into three categories:

  • Tied brokers – These guys are exclusive partners with a single lender, so they only offer products from that one source.
  • Multi-tied brokers – A bit more variety here – they deal with a handful of different lenders, giving you a wider but still limited choice.
  • Whole-of-market brokers – The big players who have access to the entire mortgage market. They can scout out the most competitive rates since they’re not tied to any specific lenders.

Will You Recommend Deals Outside Your List?

This question is especially crucial if your broker isn’t a whole-of-market type.

It’s essential to know if your broker will point you towards the best deal available, even if it falls outside their usual offerings. 

You’re looking for a mortgage that fits your needs like a glove, and sometimes the perfect fit isn’t in your broker’s immediate circle. 

A great broker should always prioritise your interests, seeking out options that offer you the best value, flexibility, and benefits, regardless of their regular network. This openness can often lead to more tailored, potentially money-saving mortgage solutions.

4. How Do You Earn Your Commission?

It’s really important to understand how your broker makes their money. Are they earning a commission? If so, how does that influence the mortgages they recommend to you? 

Remember, a good broker will always put your needs first. But knowing their commission structure helps you see whether their advice is truly unbiased or swayed by their potential earnings.

5. Can You Provide a Comprehensive List of Mortgage Options?

Don’t just settle for the top picks from your broker. Ask them to lay out all the mortgage options available to you. 

This way, you get the full spectrum and can make an informed choice. 

A comprehensive list helps you understand the market better and might reveal some hidden gems that are more suited to your specific needs.

6. What Are Your Fees and When Are They Due?

Understanding how and when you’ll be paying your mortgage broker is crucial. Do they charge a flat fee, work on a commission basis, or use a blend of both? 

And importantly, when do you need to settle these fees? Is it upfront, or do you pay at the end of the mortgage process? 

Clearing these up at the start helps avoid any surprises down the line and ensures you’re on the same page financially.

7. What Services Do You Offer?

It’s a good idea to get a clear picture of what services your broker offers. Some brokers might handle everything from A to Z, including all the paperwork and liaising with lenders. 

Others may focus solely on finding and applying for the right mortgage. Knowing exactly what you’re getting helps manage your expectations and ensures you’re not left with unexpected tasks.

8. What Are Your Working Hours?

Knowing when your broker is available can make a big difference. Some stick to the usual 9-to-5 routine, while others might offer more flexible hours, including evenings or weekends. 

This can be particularly helpful if you have a busy schedule. Confirming their availability upfront means you’ll know when you can reach them and how quickly they can respond to your queries.

9. Which Mortgage Type Fits Me Best?

Brokers are great at breaking down complex mortgage types, like fixed-rate, tracker, or discount mortgages. 

They can also enlighten you about less common options, such as offset or buy-to-sell mortgages. 

Their expertise is invaluable, especially for first-time buyers who might benefit from special schemes aimed at making their first property purchase more achievable.

10. Why Is This the Best Deal for Me?

Your broker should be able to explain why a specific mortgage deal is the best fit for your circumstances. 

Understanding the unique benefits of your chosen mortgage not only gives you confidence in your decision but also peace of mind knowing you’ve made an informed choice. This kind of clarity is crucial in navigating the often complex world of mortgages.

11. Can I Get This Mortgage with a Poor Credit History?

If your credit history isn’t spotless, a broker can be a lifesaver. They know precisely what different lenders look for and can guide you towards those more likely to accept your application. 

This not only saves you time but also protects your credit score from unnecessary hits due to failed applications.

12. Are There Any Restrictions on This Mortgage?

It’s vital to understand your mortgage’s capabilities and constraints. Discuss aspects like the ability to transfer your mortgage (porting), options for payment breaks, and the specific eligibility criteria with your broker. 

This will give you a clear picture of how flexible or restrictive your mortgage might be, helping you make a more informed decision.

13. Do You Invest in Property Yourself?

For those eyeing buy-to-let investments, a broker with personal experience in property investment can be invaluable. 

They bring not just technical knowledge, but real-world insights and practical advice based on their own investment journey.

14. How Will You Update Me on the Progress of My Application?

This question is vital for understanding the communication process with your broker. It’s important to know how frequently and through what means (email, phone calls, text messages) you’ll be updated on the status of your mortgage application. 

This ensures you’re not left in the dark during what can often be an anxiety-inducing process, and it also reflects on the broker’s commitment to client communication and service.

15. Could You Clarify What This Term Means?

Never shy away from asking your broker to decode jargon or complex terms. It’s crucial that you understand every aspect of your mortgage. 

A good broker will take the time to make sure you’re fully on board with all the details, ensuring you’re making decisions with a clear and informed mind.

What Questions Might My Mortgage Broker or Lender Ask Me?

To find the best mortgage deal for you, a good broker will need to understand your financial situation and circumstances thoroughly. They’ll conduct various checks, ask questions, and might request certain documents.

Though it might seem like a lot, it’s necessary for your advisor to create a detailed profile of you. This helps them match you with the most suitable mortgage lender. 

Here are some questions you can expect from your advisor or lender:

What’s Your Job and Income?

Expect questions about your job, the type of contract you have, and your monthly earnings.

Income is crucial in determining how much you can borrow (usually up to 4.5 times your annual salary). 

The nature of your income is also important. For instance, someone with a stable, full-time job might be seen as a lower risk compared to someone self-employed or whose income includes commission or bonuses.

What Are Your Monthly Expenses?

Lenders don’t just look at your income; they also consider your monthly expenses. 

You’ll likely go through affordability checks to calculate your debt-to-income (DTI) ratio, which is your monthly debt divided by your gross income, expressed as a percentage.

How Does Your Credit History Look?

Your credit history is crucial. Brokers will review your credit file and score. 

A clean credit history might mean fewer questions, but if there are issues like missed payments, debt collections, or bankruptcy, expect more in-depth questions and possibly a request for additional documentation.

Don’t worry if your credit history isn’t perfect. It’s still possible to get a mortgage with a history of bad credit.

Have You Had Any Previous Mortgages or Homeownership Experiences?

Previous experiences with mortgages or home ownership provide context on your familiarity with the process and any potential issues you’ve faced in the past. This information can be critical in determining the type of guidance and advice you might need.

What Is Your Current Living Situation?

Your broker or lender will likely want to know about your current living situation. This includes whether you’re renting, living with family, or if you own any property. This information helps them understand your housing history and stability, which can be indicative of how well you manage housing-related financial commitments.

Do You Have Any Planned Life Changes That Could Affect Your Income?

Changes like planning to start a family, career shifts, or major purchases can impact your financial situation. Lenders use this information to gauge future loan affordability.

What Are Your Long-Term Financial Goals?

Understanding your long-term goals, like retirement plans or investment aspirations, helps lenders recommend a mortgage product that aligns with your future financial plans.

What Questions to Ask Your Mortgage Broker When Buying a Home

Taking the time to understand your mortgage broker’s role and what they can offer you is just as crucial as their understanding of your financial situation. 

You need to feel completely confident and comfortable with the mortgage deal you’re considering.

Before making any commitments, consider asking your mortgage broker these key questions:

How Much Could I Potentially Borrow?

One of the first things you’ll want to ask your mortgage broker is about your borrowing limit. 

It’s not just about how much you earn, but also how you spend, your job’s stability, your credit history, and the kind of property you have your eye on. First-time buyers and your age can also influence this.

Each situation is distinct, so if you’re after a ballpark figure, your broker can whip up an estimate tailored to your unique profile.

And if it turns out you can’t borrow as much as you hoped, don’t fret. Your broker’s got your back with advice on boosting your borrowing power, be it through a bigger deposit or sprucing up your credit score.

What’s the Required Deposit Amount?

The required deposit for a mortgage largely depends on the property’s value.

Lenders have varying minimum deposit requirements, typically ranging from 85% to 95% loan-to-value for standard residential properties. Higher risk applicants may need a larger deposit.

It’s generally beneficial to afford a larger deposit, as it instals more trust in lenders and can lead to more favourable interest rates.

What About Interest Rates and Their Variability Over Time?

Initially, lenders might offer an attractive “introductory rate” lasting from two to five years. Post this period, you’re usually switched to their standard variable rate (SVR).

Ensure to ask your broker about the SVR, as it’s often higher than the initial rate. You need to know if it’s a manageable option in the long run. However, a good broker will typically contact you to arrange a new deal before the SVR kicks in.

What Are the Expected Costs and Fees?

Obtaining a mortgage involves various costs, some unavoidable. These might include arrangement fees, broker fees, property valuation or survey fees, early repayment charges, and occasionally exit fees.

Ask your advisor to thoroughly review the contract with you, so you’re clear about all potential costs throughout the mortgage term.

The Bottom Line

We’ve walked through some crucial questions to guide you in choosing the right mortgage broker. But keep in mind, this isn’t an exhaustive list. 

The questions you’ll need to ask, or those you’ll be asked by your broker, can vary based on your unique situation. Think of this as your starting point, a foundation to build on as you delve deeper into the specifics with your chosen advisor.

Interested in finding a broker who’s just right for you? We’re here to help. Get in touch with us, and we’ll connect you with a broker who’s not just experienced but also the right fit for your individual needs.