What does a mortgage broker do?

When reviewing your mortgage options, you will most likely realise that there are several ways to obtain the information you want and then make the appropriate arrangements. Using a mortgage broker is one of these choices. What, though, does a knowledgeable mortgage broker do for you?

To address this, we’ve included a guide on what to expect below.

1. Understand their customer
2. Give an early estimate of your mortgage capability
3. Determine your affordability
4. Make recommendations on the best mortgage programmes
5. Communicates with lenders on your behalf
6. Advises on security requirements
7. Help after the transaction

1. Understand their customer

To enable a mortgage broker to be successful, they must establish strong relationships with their customers from the outset. This relationship will set the foundation and will enable the customer to build trust with them.

Some brokers will use a questionnaire to find basic details about the customer and what their immediate goals are. However, the most important thing a mortgage broker can do for their customer is listen.

By listening to a customer’s current circumstances, and indeed their future plans, a broker can determine what sort of deal will be most suitable and what support they must provide to enable their customer to get there.

2. Give an early estimate of your mortgage capability

Before a broker begins discussing the ins and outs of mortgages with you, such as the possible interest rates available and, consequently, the monthly payments to expect, they must first determine if you have a possibility of actually acquiring a mortgage depending on your circumstances.

A broker should not perform any credit checks at this stage. However, by listening to your circumstances and requirements, they should be able to provide you with an understanding of your chances of obtaining a mortgage.

3. Determine how much you can afford.

While lenders use a pretty uniform method of evaluating what they consider to be affordable, they all do it in slightly different ways. A mortgage broker may review lenders’ affordability calculators and enter the information precisely as it needs to be done to guarantee you get an accurate number of what they consider to be affordable.

While this may allow you to learn how much a lender believes you can borrow, a professional broker will discuss and set your personal budget and affordability. Just because a lender thinks you’re qualified to borrow a specific amount, it does not imply you will.

The length of your mortgage will most likely affect the cost of the mortgage, and a broker will discuss the advantages and downsides with you. Ultimately, whether you use a broker or not, a lender will not lend more than they feel affordable, even if you disagree.

Fill out our quick and easy Mortgage Affordability calculator below. We only require a few details to see how much you may be able to borrow.

NO CREDIT CHECKS!

4. Make a recommendation for the best mortgage programme.

Using their expert knowledge and understanding of your specific criteria, a broker should be able to recommend which lenders will offer the best mortgage rates for you. As there is no one-size-fits-all approach when it comes to mortgages, a broker will be able to use their market expertise to suggest which mortgage is most suited to you and your circumstances.

A broker may consider the following: the term of the mortgage, interest rates, cost of monthly payments and how this links to your affordability, and other benefits such as your opportunity to return the loan early.

5. Communicates with the lender on your behalf

Your broker should be your sole point of contact for your mortgage and should handle all aspects of your application on your behalf. They will most likely have a solid support staff behind them who will assist them throughout the application process, but the broker should be in charge.

They will guarantee that your application is filed so that you may do the initial credit check and, if everything goes well, proceed with the complete application. The broker should handle all communication going forward, from the moment a lender issues you with a formal offer to the point of completion.

Throughout this process, it is also the broker’s job to ensure they communicate with you. This helps maintain the relationship they worked hard to initially build and allows you to have clarification on any queries you may have.

6. Advise you on your security requirements

When you own property, whether for personal use or as an investment, it must be insured. While the restrictions may alter if the property is leased, it will most likely be your obligation to safeguard the property.

A lender will often require you to take out buildings insurance: a lender has a stake in the property you buy until you pay off the mortgage in full. Buildings insurance protects their asset and covers damage to your home in the event of a flood or fire.

In the event of damage to your home, without buildings insurance, you would be required to pay your monthly mortgage repayments as well as the cost of rebuilding your home. Some mortgage brokers will offer to find buildings insurance for you; however, you are not obligated to use your broker. You can find buildings insurance independently, should you wish to do so.

7. What a broker will do when the transaction is completed

While you should not anticipate your broker to contact you on a frequent basis after the transaction is completed, they should be available at all times for your future borrowing needs and any queries you may have about your mortgage.

They should also make a note in their calendar to contact you again in the future to discuss your mortgage arrangements, particularly when any schemes are set to expire.