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Personal finance

Mortgage Brokers Offer Better Deals for Borrowers

Strategic Insights

— 1 min read

Borrowers can benefit from using mortgage brokers to navigate the complexities of the mortgage market, according to industry experts. Despite lingering concerns about commission-driven advice, reputable brokers can help borrowers secure better deals on fixed and discounted rates, as well as term assurance. By using a broker, borrowers can avoid being "sold blindfolded" and ensure they get the best mortgage for their needs.

Key Takeaways:

  • Reputable mortgage brokers can help borrowers secure better deals on fixed and discounted rates, as well as term assurance.
  • Borrowers can save up to £3,000 over the life of a loan by arranging life cover independently through a broker.
  • Some mortgage deals are now offered exclusively through brokers, providing access to better rates for certain types of borrowers.
  • Brokers can do better deals than the public because they have established contacts with lenders.
  • Reputable brokers should be able to pinpoint the best loan for a borrower's needs, rather than pushing a particular product.
  • Insurance products are often more expensive when purchased through a bank or building society, with monthly premiums potentially doubling through certain companies.
  • Borrowers should be aware that the right deal is not always the cheapest interest rate, and should consider factors like fixed rate redemption penalties and compulsory household insurance.
  • Mortgage brokers usually charge a fee of between 0.5% and 1% of the advance, depending on the complexity of the mortgage.

Statistics:

  • Borrowers can save up to £3,000 over the life of a loan by arranging life cover independently through a broker.
  • Five-year fixed rate mortgages offered by the Abbey National and Halifax during 1994 were as much as 1% more expensive than the cheapest on the market.
  • Monthly premiums for term cover can be twice as much with some companies, depending on the provider.
  • The typical fee for a mortgage broker ranges from £250 to 1% of the advance, depending on the complexity of the mortgage.

Sources:

  • "Mortgage Brokers Claim They Can Do Better Deals Than the Public" by David Spittles, Financial Times, 1994 (no date given in original)
  • Interview with Ian Darby of John Charcol
  • Interview with Phillip Cartwright of London & Country Mortgages
  • "Lifeline Service" by London & Country Mortgages (no date given in original)

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