Which Type Of BROKER Is Right For You?
help you through the minefield of mortgages whether
you need a buy to let product, have bad credit, need
a self certification mortgage, are a first time buyer
or simply need mortgage advice. Their job is to basically
find the best mortgage deal and mortgage rate for
their clients needs, complete all paperwork and manage
the application through to completion of the deal.
mortgage maze can be a difficult one to navigate and
seeking unbiased mortgage advice is often the easiest
way to understand the options available.
is more than one way of classifying BROKERS.
The Financial Services Authority (FSA) list various
classes of BROKER dependant upon
independence and fee structure. These definitions
are currently under review as part of the FSA's Retail
Distribution Review (RDR) and will be updated if there
are any changes.
IFAs (independent financial advisers) who have
access to the whole of mortgages on the market
(as well as other areas of financial advice) and
give you the choice of paying by fee if you prefer
Mortgage Advisers who offer products from the
whole of the market as well as giving you the
choice of paying by fee
Brokers who offer products from the whole mortgage
market but are paid via a commission
is probably more important from an Investors point
of view to choose their BROKER based on the amount
of suitable products offered.
can then be classified by whether they are tied to
a particular lender of not
This type of BROKER is able to
recommend a range of products from a limited number
of providers. Only the products of those providers
who the BROKER is tied to are
available to the end client. It is important to
bear in mind that you will need to check the amount
of products and providers on offer before deciding
if the limited choice available is suitable for
A tied BROKER can only advise
on the products of one provider. If you have a
good relationship with your bank, you may feel
comfortable dealing with that sole provider for
the majority of your financial requirements. This
will however, limit the number of products available
to just that bank and you may be missing out on
a better product available through another provider.
a side note; it is worth mentioning that only an Independent
Financial Adviser or Independent Mortgage Adviser
has to offer a choice of paying by fee. By offering
a fee option the adviser / BROKER
can call themselves independent – the term independent
does not refer to whether the adviser has access to
all the products in the market place.
cost for a BROKER varies quite a
lot. A High Street Agent may even be free as they
are more likely to be tied to a group of providers
and so are paid via Commission
commission-based payment is probably the most common
form of remuneration for BROKERS
providing mortgage advice. The BROKER
is paid directly by the product provider. The cost
of this commission paid out by the provider will normally
be factored into the price of the product or the interest
rate offered. These commissions vary with different
products and providers but will be documented on the
Key Facts Illustration (KFI)
that the provider should send out.
BROKER will probably charge a set FEE
(as well as claiming their commission)
an adviser a set fee is generally more common with
investment products especially mortgages. The fee
can be in the form of an hourly rate, a set fee for
the whole job or a percentage of the property value.
Expect to pay anywhere in the region of £300
– £1000 as a set fee or as a percentage
charge example, a 1% fee on a £70000 mortgage
would equate to a £700 fee. If you use the same
BROKER over and over again, it is
possible to negotiate discounts in fees.
mortgage advisers must hold an industry-recognised
are several qualifications available to mortgage BROKERS
that meet the Financial Services Authority’s
(FSA) standardss, such as:
Chartered Insurance Institute (CII) Certificate
in Mortgage Advice (Cert MA)
ifs School of Finance Certificate in Mortgage
Advice and Practice (CeMAP)
Mortgage Advice and Practice Certificate (MAPC)
from the Chartered Institute of Bankers in Scotland
are other specific qualifications that mortgage BROKERS
can gain, depending on their area of specialism; including
equity release lifetime mortgages for example.
BROKERS that give mortgage advice MUST to be authorised
and regulated by the
firms are placed on the FSA register and have to meet
the regulators rules and regulations. The FSA register
can be used as a checklist as all regulated firms
have an FSA number allocated to them.
you know? The word BROKER originates
from the Anglo-Norman ‘brocour’ which
refers to the middleman in transactions and is first
found in Middle English in 1355.
doubt any BROKER would turn down
a gift and this may be justifiable from an etymological
point of view because the word BROKER
may be connected through its Anglo-Norman source,
with the Spanish word ‘alboroque’, meaning
"ceremony or ceremonial gift after the conclusion
of a business deal."!