The mortgage industry is built on many professionals and companies assisting others with their financing in order to help them find the right solutions for their needs.
This includes mortgage brokers and direct lenders that provide services to people seeking mortgages for their homes.
A question that is commonly asked is “What’s the difference between a mortgage broker and a lender?”. A mortgage broker acts as an intermediary by helping customers to find the best lenders that suits their needs. A direct lender may be a bank or a financial institution that you can directly apply to for a loan.
If a prospective homeowner is looking for a mortgage, they may wish to consult a mortgage broker first. Brokers serve as intermediaries and they can do a lot more than just simply churning out a list of available mortgage options, so it could be worth discussing your needs with a broker. Mortgage brokers will tell you from the beginning what range of mortgages they can offer and they will also be able to provide bespoke advice.
Additionally, a mortgage broker’s job is to collate information about the different requirements needed by the lender from the borrower, this includes income, tax returns, investments, pay stubs and detailed assets along with credit reports. This information helps lenders to analyse how much the borrower can borrow, to receive a mortgage loan approval they will take this information to the bank.
Due to legislative changes, the rules regarding mortgage affordability have tightened and this means that both the lender and the broker will need to consider your financial situation and assess your affordability.
These legislative changes have made it harder to get a mortgage, however, it has also made it a safer option to go with a mortgage broker as they will undertake the full financial assessment and find the right mortgage products that will be most suited to you.
Benefits of Mortgage Brokers
Convenience – Mortgage brokers will already have a range of contacts and lenders so they can save you the effort of looking around for lenders. Your broker will also do all of the hard work of researching and finding the most suitable product for you.
More Options – It’s important to know that some lenders may only work exclusively with mortgage brokers so you may not have as many options if you were to go directly to a lender. Another benefit is that brokers will often get special rates from these lenders which you can benefit from.
Cost-Savings – When you are applying for a new mortgage or you are working with a new lender, they may be several different types of fees, such as application fees, origination fees, and appraisal fees. In some cases, a mortgage broker may be able to get the lender to waive some of their fees and sometimes all of the fees.
Direct Lenders – A direct lender is a private entity or a financial institution that provides the loan for a mortgage. Banks and other financial institutions may also be direct lenders.
Direct lenders are private entities that provide a loan for a mortgage. Banks and other financial institutions can be direct lenders. Some direct lenders are private entities directly concerned with the funding of mortgage loans for the public, many of which work online. For example, borrowers who use lenders may complete their approvals and access them online.
Benefits of Lenders
Direct-Only Deals – Some lenders are able to offer exclusive deals if you go directly to them. The extent to which building societies and banks are able to offer direct deals will vary, but it is an incentive for potential customers to use lenders directly.
Preferential Rates – If you already have an existing current account or a savings account with a particular bank, going direct to that bank may enable you to benefit from preferential mortgage rates.
No Broker Fees – When you go direct to a lender, you won’t have to pay broker fees.
About Stuart Mosley
Stuart Mosley (CeFA, CeMap, CLTM) founded SJ Financial Solutions in June 2005 having spent 12 years with big corporates such as Halifax and Santander. He felt the personal touch and straight speaking was missing from financial and mortgage advice services and set up SJ Financial Solutions to change this.
If you would like to book an appointment then please get in touch and we can arrange a suitable time to discuss further. We can arrange appointments at a place and time suitable to you, we can discuss your options over the phone or if you prefer email, then this is fine with us.