Is it beneficial to use a Mortgage Broker?

6/2/19

Open Vision Finance

This is an article on the benefits of using a Mortgage Broker By: Ellen Hyslop – Business Case Handler at Open Vision Finance.

Is it beneficial to use a mortgage broker?

I know what you’re probably thinking, ‘maybe it’s worth it when buying my first house’, ‘I only need to change rate, what is the point when I can go direct?’, but what if I told you that over 70% of UK homebuyers/owners use a Mortgage Broker? Surely that many people cannot be wrong…

So, lets talk about purchasing a property, whether it is your residential, or a Buy To Let, they’re both important, right? Right! You’ve offered what you think is the right price for the house, and your offer has been accepted – brilliant! Now you have a price set, you don’t want to be paying more, it’s a lot of money already, in fact no doubt it will be one of the biggest purchases of your life! So why pay more than you have to when it comes to your mortgage?

The answer to that is very simple…. You shouldn’t have to. This is why mortgage rates are so important! You may think it’s just a number, and a different rate may only save you ‘a couple of pounds a month’, but just think what that equates to. £5 a month? Not a lot! £60 a year? You probably wouldn’t even notice. But put these monthly savings over the term of your mortgage, say 35 years for example, do you still think that saving is small? Those ‘couple of pounds’ actually equate to over £2,000.

Sometimes the savings in an interest rate could result in even bigger savings than illustrated above too, depending on how much you have borrowed and it could be £50, £100+ or more per month – this may then lead us to advise you to reduce your mortgage term and keep your payments the same as you have been paying, rather than adopting the saving on a monthly basis. This could then reduce your term by a number of years! For example, for someone who chose to do this and kept their payments at £700 per month (rather than reducing it to £600 for example) as they felt this remained affordable to them, for every year that they reduced their mortgage this by it would equate to £8,400 per year. Many of our clients have reduced their mortgage by 2 years, 5 years and even 10 years by doing this!

Of course, everyone would like save money that easily, imagine what you can do with that! But unfortunately, not all home owners will have the opportunity to save, purely because they choose the easy root of staying with their current lender and simply switching to a new rate without even looking what else is about! Or, even worse, sitting on the Standard Variable rate because their mortgage is just another thing on their ‘to-do’ list that, lets face it, we don’t always get round to doing! Of course, this is through no ones fault, sometimes there just aren’t enough hours in the day. But, that is where your Mortgage Broker steps in and walks you through every step, taking the hassle and pressure away from you. Getting that extra thing off of your list!

Not only will a Mortgage Broker take away the stress of purchasing or remortgaging, sort your Life Protection should anything happen, arrange your home insurance…(need I say more?), but they will also make sure that you get the absolute best product that’s available to you, with a lender that suits your needs. And, when your product expires, guess what? Your Mortgage Broker will diarise to contact you so you don’t have to worry about putting the date in your diary – one less thing for you to worry about or remember!

Let’s assume, for example, that you feel a 2 year fixed rate is the best product for you, meaning every 2 years you need to look back at your options, and decide what’s best. When looking through your options, you probably don’t think about the amount your mortgage balance has reduced in that time, but did you know that that difference could be the factor to change which Loan to Value category your mortgage falls in to, resulting in a change of mortgage rates? In some cases, this change in Loan to Value could potentially open a wider range of lenders to you, maybe a Mainstream Lender that wasn’t available to you before. These are all details that an experienced Mortgage Adviser will know, and that is why their knowledge is so sought after by homeowners throughout the UK.

Apart from potential savings on your mortgage payments, why else is it beneficial to use a broker? This question has endless answers. When you think of a Broker, maybe you just think mortgages, perhaps even only buying a house but in actual fact they cover a lot more than that! Our brokers at Open Vision Finance will help you source not only the best mortgage product for you, but the best level of Protection as well. This isn’t only Life Protection, it can range anywhere from a level of Income Protection all the way to full Critical Illness Cover.

Although Life or Critical Illness Protection isn’t legally required with your mortgage, it is highly recommended to have cover in place for your mortgage balance, at least. But without a level of knowledge in the industry how would you know which policy is the best? If you’re covered for the correct amount? If the type if cover you pay for is the correct one? The truth is that unfortunately millions of people in the UK have left themselves at risk by not having cover in place at all, because they did not fully understand the importance of protection, or the policies themselves.

This leads me to ask the people that are taking out the all important protection policies, without the help of a Broker – how are you deciding on the policies you are paying for? Are you choosing your Protection Provider purely because they ranked cheapest on a comparison website? If yes, are you actually fully aware of what you are now covered for? In most cases, I think it’s safe to say no. For Brokers around this UK, this is a worrying and somewhat a frustrating thought as clients selecting the wrong policies could in fact result in a large waste of money being spent on their monthly premiums, with no pay out in the event of a claim.

Mortgage and Insurance Brokers are qualified and trained to help you, and have a duty of care towards you making your Life Protection just as important as your Mortgage. Whole of Market Brokers are not tied to any provider, meaning they are working completely for you, and only you. I think I can speak for Brokers around the UK, when I say we feel we have not done our job to the absolute best we can, when we have to leave a client without cover due to their decision.

With these points in mind, we hope you will see the many benefits of using a Mortgage and Insurance Broker and understand that our main purpose is to help you. If after reading this you have any questions that you couldn’t quite think of before, or perhaps you are now thinking on re-visiting your mortgage or protection deal, please contact us and let us help you. To arrange an appointment with one of our experienced mortgage broker’s, please get in touch with us on 01823 444022 or by email to advice@openvisionfinance.com.