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Mortgage Broker – Six Things to Beware Of
If you are looking for a mortgage, you may have been advised that it’s better to go through a mortgage broker. This seems to make sense. After all the broker works with mortgages all the time. So of course the broker knows more than you. Brokers are experts, aren’t they?
This is generally true. But it doesn’t mean that you have to accept everything the broker says, or be completely uncritical. There are some things you need to look out for.
• At one time just about anyone could set up as a mortgage broker. Now brokers have to be regulated by the Financial Services Authority (FSA). Check that the broker is registered with the FSA by going on the FSA web site (www.fsa.gov.uk) .
• All brokers are supposed to offer advice and a recommendation. Beware of a mortgage broker who claims only to offer information. This may be to forestall potential complaints.
• Be extremely wary of a broker who encourages you to bend the truth in order to get the mortgage you want. It’s part of the mortgage broker’s job to make sure you get a mortgage which you can afford and which is right for your circumstances.
• Some mortgage brokers will tell you that they are “whole of market” when they only in fact have access to a representative panel. This may not necessarily be a bad thing in itself, but you should be careful of a broker who you think is trying to mislead you. Check just how many lenders the broker has access to. If it’s less than 10, go somewhere else.
• A mortgage broker who works on a commission basis may seem cheaper. But can you really be sure that the broker is recommending the product that is best for you, rather than being swayed by the commission? Of course most brokers are honest and genuine. And they are actually bound by their professional code to give the advice that is in the client’s best interests. But if this is a worry for you, choose one that operates on a fee basis.
• If you do use a mortgage broker who operates on a fee basis, avoid one who expects you to pay the bill before completion of the transaction. This can cause problems if things change or break down later on. Check at the beginning when the broker expects the fee to be paid.
Always remember you are the customer. Don’t let yourself be over-awed by the broker’s expertise. A good mortgage broker will always be happy for you to check everything and ensure that everything is being done in your best interests.
