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When Would A Mortgage Lender Only Work Through A Broker?

When navigating an increasingly complex property market, it always pays to have a guide, and one of the best tools for closing sales and getting favourable mortgage rates and terms depending on your circumstances is a mortgage broker.

A mortgage broker is an ideal intermediary between buyers and mortgage lenders, as they quickly learn what a buyer needs and their circumstances and can use their network of lenders and their expertise to track down the best possible deal.

In the current market with so many questions up in the air, having a broker on hand to cut through the confusion and provide advice on how to manage often rapidly changing conditions and products on offer is exceptionally helpful.

They can save time trying to learn everything about the market and go through the paperwork with buyers, helping ensure their application is right the first time, as well as giving the buyer a chance to sample a wide range of lenders at once.

This makes them very useful and worth it in a wide range of circumstances, but there are some situations where a broker is not only important, but they are a vital necessity.

The distinct difference between going to a broker and going directly to a lender is that they work for the client, whereas the bank or building society employee works for a specific company. 

Brokers serve their clients and have their interests in mind, while banks won’t let clients know if rates have been reduced and that they could pay less to borrow the same amount. Brokers, meanwhile, will continue to check the markets over time to find the best rates going.

Another clear benefit of using a broker is that the wait time is significantly lower. If you go through the banks, you’ll get in touch with them for an appointment and you’ll likely have to wait weeks. 

But with brokers, a meeting can be arranged to take place within 24 to 48 hours. This meeting will also be tailored to suit your needs and what’s important to you, whereas meetings with bank employees are largely scripted.

You’ll also have access to a broad range of lenders if you use a broker. For example, lenders like Precise, BM Solutions & Accord can only be accessed by using a mortgage broker.

What Are Broker-Only Mortgages?

Many lenders are available through the high street, and so whilst it can often be easier to go through a broker, theoretically it is possible to walk into a branch or visit a website and access some mortgage products directly.

However, whilst using a broker is advisable here, it is technically not required. However, there is a particular class of mortgage that cannot be accessed except through a broker.

Intermediary-only mortgages, or broker-only mortgages, are products typically provided by the many specialist lenders that also only work through a set of approved brokers and will not provide mortgages directly to members of the public.

These deals are often exclusive to the broker and can often end up being on particularly favourable terms, especially when it comes to greater flexibility and more bespoke, tailored arrangements due to working with a trusted broker, along with a better chance of approval.

As well as specialist broker-only lenders, many mainstream lenders have broker-exclusive deals as well, meaning that even buyers planning on working with a conventional big-name lender would potentially benefit by going through a broker.

Why Should You Get A Broker-Only Mortgage?

Working with a broker is advisable, but there are a lot of benefits that come through working in the brokerage system, many of which are not available in retail products.

The most common reason to go through a broker is not only the wider range but a wider understanding of the potential options and how they differ and improve on the ones available at retail.

This advice is the main selling point and could help close the deal on the perfect mortgage that through savings and favourable terms more than pays for the fees.

Another major feature, one that makes it increasingly valuable to younger first-time buyers today is the option for more flexibility, including longer-term mortgages than the norm, enabling people who do not necessarily have huge incomes to get their foot in the door and reap the benefits of home ownership.

Conversely, many retail mortgages have strict overpayment limits, given that the main profit they receive is through the interest on repayments. Some broker-only mortgages can remove this cap, allowing buyers to pay more when they can and cut their loan term short.

However, by far the biggest use case for broker-only mortgages comes from more complex mortgage requirements and buyers who deviate from the normal ideal retail lenders want.

People who are self-employed, those who work in certain specialist professions or people buying properties with complex conveyancing issues such as thatched roofs and listed buildings can often struggle to get conventional mortgage products.

Working with a broker puts them in touch with specialists who can supply them with the finance they need to make their unconventional dream a reality, primarily through using alternative criteria to ensure suitability.

Finally, and most importantly, people who suffer from a bad credit history or even an outright discharged bankruptcy have a higher chance of getting approval, as a mortgage broker can work directly with them and more effectively ascertain their chances of repayment, taking into account LTVs.

This can be particularly important for those who passed eligibility criteria initially, only to be declined after further eligibility checks raise concerns.  

A broker can help provide expert advice and work directly with lenders to make the best case for unconventional borrowers to find the lenders that suit them best.

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