If you have reached the stage where you are ready to kickstart your homebuying journey but feel overwhelmed by the world of mortgages, we have some good news. You could benefit from working with a mortgage broker. We have asked our friends at Censeo Financial to create this perfect guide to what a mortgage broker can do for you and how to find the right one for your needs.

What is the role of a Mortgage Broker?

A mortgage broker is an advisor who can help you find the right mortgage product for your situation. They usually have access to mortgages not available in the high street or products that can only be gained through a mortgage broker. They act as a middleman between the mortgage lender and the prospective homebuyer.

This professional can help you navigate the daunting world of mortgages. Buying a property can be a stressful experience and one of the most expensive financial commitments you will ever have so it’s important you get this right. It’s important to make sure the mortgage is right for your personal financial situation, your needs and goals and to ensure you can afford and sustain the mortgage. This is why many people decide to use a mortgage broker who are specialists at matching the best mortgage to the buyers' needs and goals.

A mortgage broker represents a valuable resource since they have a strong knowledge of the industry as well as a large network of lenders to work with. This means that they might be able to secure a better deal than you’d have found by yourself.

How can I find the right mortgage broker?

Start by researching local mortgage brokers in your area. You can do this online, ask for recommendations from friends or family, or check professional organisations such as the UK Finance or the Association of Mortgage Intermediaries.
Ensure that the mortgage brokers you're considering are properly qualified and regulated. In the UK, mortgage brokers must be authorised by the Financial Conduct Authority (FCA). You can verify a broker's credentials by checking the FCA register online.

You can also make an informed decision by looking for reviews and testimonials from past clients. Brokers will usually have them on their website, on their social media or even on Google Reviews.

Some mortgage brokers specialise in certain types of mortgages or cater to specific demographics such as first-time buyers or self-employed individuals. It is important to consider whether a broker's specialisation aligns with your needs. With Shared Ownership, Peabody New Homes will refer you to one of their panel mortgage brokers for an initial assessment, which is required to evaluate the share you can buy. All are experienced with Shared Ownership. However, there is no obligation to use them to source your mortgage.

Enquire about the broker's fee structure upfront since some brokers charge a flat fee, while others earn commission from lenders. Make sure you understand how the broker is paid and how it may impact the overall cost of your mortgage.

Choose a broker who communicates clearly and transparently with you. Trust your instincts when selecting a mortgage broker. Choose someone you feel comfortable working with and who demonstrates integrity, professionalism, and a genuine commitment to helping you find the best mortgage solution for your needs.

How many lenders can a mortgage broker access?

There are different types of mortgage brokers: a whole of market broker and a “tied” broker. The first kind is basically independent and has access to pretty much all the lenders available on the market for the way you are buying your home i.e. Shared Ownership.

A tied mortgage broker is usually linked to a panel of lenders which means they can’t get you every deal. However, from the deals available, a tied broker might be able to get better terms from their privileged relationship with specific lenders.

What is the interest rate, and will this change?

The mortgage rate available to you will depend on the amount of deposit you have, your credit history, and your income and expenditure. Lenders all have different criteria, and the mortgage broker will match the mortgage product that is best suited to your personal circumstances and the type of property and construction.

Each lender will have a Standard Variable Rate (SVR), this is their default interest rate which they set themselves. There are various other mortgage products that lenders may offer. These include:

• Discount Rates - set at a certain percentage below the SVR. The percentage value is fixed for the length of the deal, which is usually two or five years.
• Tracker Rate - This is the only rate that is determined by an external financial indicator, rather than the lender. This is usually the Bank of England base rate, so your monthly repayments rise and fall in line with it.
• Fixed Rates - A fixed interest rate will not change for the length of the deal. Available for two, three, five or ten years.

It’s essential to note that mortgage rates can fluctuate due to the various factors described, and therefore it is essential to keep track of the mortgage market and seek professional advice from a mortgage broker like Censeo when making mortgage-related decisions.

couple meeting with housing professional

To buy your home through Shared Ownership, get advice from an experienced mortgage broker.

Are all mortgage brokers knowledgeable about Shared Ownership?

While many mortgage brokers are knowledgeable about Shared Ownership, it's not guaranteed that every broker will have expertise in this specific area. Shared Ownership involves a unique set of circumstances and requirements, so it's essential to work with a broker who has experience in this type of mortgage arrangement. When searching for a mortgage broker to assist with Shared Ownership, consider asking the following questions to gauge their familiarity with the process:

  • Have you worked with clients who have bought through Shared Ownership before?

Experience is key, so inquire about the broker's past involvement with Shared Ownership transactions.

  • Do you have access to lenders who offer Shared Ownership mortgages?

Not all lenders provide mortgages for this government-backed alternative to buying your home outright, so it's important that the broker has access to a network of lenders who specialise in this.

  • Can you explain the eligibility criteria and application process for Shared Ownership?

A knowledgeable broker should be able to walk you through the requirements and steps involved in securing a Shared Ownership mortgage.

How much does a mortgage broker charge?

Some mortgage brokers are free. They make money by earning a commission paid by the lender when they arrange a mortgage. Other brokers charge a fee. The fee can either be a flat rate generally around £500 or a percentage of the amount you're borrowing. Make sure you know how much you'll be charged before signing up. Remember, you may also have to pay mortgage arrangement fees on top of the fees you pay to a broker. That said, a good mortgage broker should be able to save you money in the long run by finding the cheapest mortgage for you.

What other services can a mortgage broker provide?

As well as finding the best mortgage deals available on the market, mortgage brokers often provide financial advice tailored to each client's situation. This might involve strategies to improve credit scores, suggestions for managing debt, or recommendations for saving for a down payment.

They can also provide market insights since they stay on top of trends and developments in the real estate market. They can offer valuable insights into local market conditions, property values, and emerging opportunities, helping clients make informed decisions about when and where to buy.

The mortgage process involves a ton of paperwork, and it can be overwhelming for many buyers. Brokers help navigate this paperwork maze, ensuring that all necessary documents are completed accurately and submitted on time.

When it comes to negotiating the terms of your mortgage, your brokers will act as a real advocate, working to secure favourable terms with lenders. They use their expertise to get lower interest rates, reduced fees, or even more flexible repayment options for their clients.

Brokers analyse their clients' financial situations and goals to determine the most suitable loan options. They help structure loans in a way that aligns with clients' long-term objectives, whether that involves minimising monthly payments, maximising tax benefits, or paying off the loan quickly.

Even after the mortgage is finalised, brokers continue to provide support to their clients. They may offer advice on refinancing options, help with loan modifications if circumstances change, or provide guidance on other financial matters related to homeownership.

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