If you’re buying property for the first time – or it’s been a while since you applied for a mortgage – you may be wondering which route to go down to get the best mortgage deal: through an independent advisor or applying direct to a bank.
Everyone you speak to will have a view on this (we’re biased too of course!) but it can be difficult to separate opinion from fact.
Here are just some of the things you might have heard about applying through an independent mortgage advisor…
- It will cost you more in fees
- You won’t be able to choose a product from your existing lender
- A bank will offer direct applicants the cheapest rates on its own mortgages
- You won’t have the same financial protections.
None of which are true.
In this post, we debunk these and other common myths about mortgage advisors and explain why you could get a better mortgage deal with us (even from your current lender).
Myth 1: Independent mortgage brokers are more expensive (because of our fees)
This is false. Apply for your mortgage through your bank and your application could come attached to an arrangement fee, a booking fee, a valuation fee, a fee for setting up the account and (potentially) a higher lending charge if you only have a relatively small deposit.
Virtually every mortgage has some fees somewhere, but when you choose a mortgage with a bank, you’ll be tied to whatever fees come with that product. Choose an independent mortgage broker and we can search the whole market for products that either don’t come with so many fees attached, or that keep those fees low.
Ah, you’ll hear the banks say, but we don’t charge a broker’s fee. That’s true, but often, neither do we. Depending on the mortgage, you could find our fee is largely (or entirely) covered by the commission we receive on a mortgage product. And just to be clear, that doesn’t mean you pay more for your mortgage. In fact…
Myth 2: A bank will always offer the cheapest rates on its own mortgages
You’d think so, wouldn’t you? Frequently, though, it’s not true. So if, for example, your latest mortgage deal is about to expire and your bank offers you a ‘great deal’ to continue your relationship with them, speak to your independent mortgage adviser first. Chances are they’ll be able to find a better deal with the same bank for less.
Myth 3: Independent mortgage brokers are more expensive (because of the rate you end up paying)
Actually, the exact opposite is true.
Suppose you’re a bank. You have 50 mortgage products on offer, which creates a reasonably broad spectrum of cheapest to most expensive. But now, put yourself in the shoes of an independent mortgage broker, with a HUGE range of mortgage products to choose from. What are the chances that your bank’s cheapest mortgage (out of a choice of 50), is actually the best deal available out of the thousands available? Pretty slim.
In March 2021, even though the market has been subdued by the pandemic, there were still around 3,500 mortgage products available according to moneyfacts. And as money.co.uk noted, even a difference of 1.5% on a £100,000 mortgage over a 20-year term could be worth £1,030 a year.
So you stand a much better chance of finding a better deal with an independent mortgage advisor who has access to a much wider range of products.
Myth 4: You won’t be able to choose a product from your existing lender
Um, yes you will. And as we’ve already discussed, it could be a better deal than they’re offering you.
Myth 5: It’ll be cheaper if I do it myself
No, it won’t. Not every mortgage is available to everybody. Some lenders keep some products to themselves. But many of the best rates are exclusively available to brokers. So while doing it yourself may mean you’re able to secure the best deal from the products you’re able to see, you won’t be able to see all of what’s available.
Myth 6: You don’t get the same financial protection going through an independent mortgage broker
Yes, you do. In the UK, if you offer mortgage advice you have to be qualified to do it. That means holding a Financial Conduct Authority (FCA)-recognised qualification. It also means that you are regulated by the FCA. That gives you two pieces of reassurance:
- You can expect a certain level of expertise; and
- You can use FCA approved complaints and compensation procedures if there’s ever a problem
Banks have to be FCA regulated and their advisers qualified. So do we. There is no difference in the level of protection you can expect using an FCA-regulated independent mortgage broker – but do check they are regulated. We are.
It’s time to those myths to rest for good. Have a chat with us about your mortgage, and let’s find the best deal on the market for you. To arrange a free initial consultation, please email Sharon Rigden or call 01772 431233.
RfM Mortgage Services is a trading style of Key Mortgage Advice Limited who is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register No 312930 at register.fca.org.uk/
Think carefully before securing other debts against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage
If you have a complaint or dispute with us, you are entitled to make a complaint. We have a complaints procedure that is available on request. If you wish to register a complaint, please contact us either in writing, by telephone or email.
Please be assured we treat complaints seriously. For your protection if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service (‘FOS’). Please see the following link for further details: financial-ombudsman.org.uk/