using a broker
The mortgage market is complex and there are
scores of different types of mortgage to choose from, which is
why it may be a good idea to take advice.
After all, a mortgage is probably one of the
largest financial commitments you will enter into, and getting it
wrong could cost you dear.
Although some mortgage brokers charge you for
their services, the savings you can make by getting the best deal
for your circumstances, should more than pay for the cost of
their fees.
Since mortgage brokers became regulated in
2004, there are three ways in which you may be charged:
Fees only: this is where you pay an hourly
rate to the adviser. A retainer may also be agreed whereby you pay
a certain amount each year and then pay a reduced rate on hours of
advice given.
Commission: the adviser receives commission
from the lender which is typically a percentage of the loan. If you
pay nothing direct to the adviser, you may well be paying
indirectly - via a higher arrangement fee or interest
rate.
Fee offset: this involves the adviser
offsetting his commission or the ‘procuration fees’ received from
the lender against his fee to you for advice.
All advisers – whether independent, tied or
multi-tied – are legally obliged to disclose upfront how they
charge.
That said, there are a few lenders who are
willing to pay huge commissions to encourage brokers to sell
expensive mortgages such as sub prime and self certification
mortgages , so always be wary of any deal which is paying the
adviser an exorbitant fee or commission.
If the adviser refuses to disclose in writing
his remuneration arrangements, steer well clear.
Remember that only IFAs are legally required
to scan the entire market. To find an IFA specialising in mortgages
in your area, visit the IFA Promotions website at http://www.unbiased.co.uk/