A mortgage broker is able to utilize industry knowledge and experience to source deals that can be beneficial to an applicant. Thanks to legislation in favor of the consumer, the broker must offer advice that is appropriate to the applicant's circumstances and can be held finanally liable if their information or advice is later found to be defective or misleading.
Therefore a broker must assess the borrower's circumstances before making any contact with a lender; this may include a credit report supplied by one of the three credit reference agencies (Experian, Equifax and Creditcall) and verification of income to support the promise that the mortgage is affordable. The broker is also responsible for completing the lender application form, collecting all the required documents from the applicable, explaining all the legalities of the mortgage agreement and submitting all the relevant material to the lender.
There are, in essence, two types of mortgage broker: those who are 'whole of market' brokers and those who work with a smaller, select panel of lenders. Whole of Market brokers, such as The Mortgage Broker Ltd, offer applicants the opportunity to select their mortgage product from any available UK lender they choose. This approach is ideal for those who are not confident in their working knowledge of mortgages, those who have adverse credit ratings and for those who simply do not have the time to thoroughly research the mortgage market.
Brokers who use smaller panels of lenders are more restricted in the choice of product they can offer. In turn, this can also limit their experience in certain types of mortgage given that they may be used to dealing with a set number of lenders and their associated products. An experienced broker, however, may have the power to negotiate terms, on behalf of his or her client, that may have appeared previously unattainable. The broker may also be able to begin and finish the entire procurement process on the client's behalf.
All mortgage brokers are regulated by the Financial Services Authority, offering the consumer an added degree of protection as, the broker's information to the lender must be inaccurate, they can be held responsible for any financial problems that have been incurred. They are obligated to ensure that their advice caters for the needs of the applicable, while taking into account the lender's criteria, ensuring that the client receives absolutely impartial advice.
As well as the basic service of mortgage procurement, many mortgage brokers also offer further services and advice on other aspects of mortgaging, including re-mortgages, buy to let, self-certification and adverse credit mortgages. Mortgage brokers now cater for over 68% of all mortgage deals across the UK. With the often confusing jargon offered by financial institutions and the lack of explanatory literature offered by the internet, it is not hard to see why.