If you’re considering applying for a mortgage in the UK, one question that may have crossed your mind is, ‘Do mortgage brokers get better rates?’. With so many mortgage deals out there, it can be overwhelming trying to find the right one on your own. Mortgage brokers are often recommended as a helpful resource, but are they really the key to securing the best rates?
In this article, we’ll explore the role of a mortgage broker, how they operate, and whether they can truly help you find the most competitive mortgage deal.
What Exactly Does a Mortgage Broker Do?
A mortgage broker acts as an intermediary between you (the borrower) and the mortgage lender. Their job is to understand your financial situation, assess your mortgage needs, and then search for the best possible mortgage deal from a variety of lenders. Mortgage brokers work with a range of banks, building societies, and specialist lenders, so they often have access to a wide variety of mortgage products.
In essence, mortgage brokers can save you time and effort by doing the legwork for you. Instead of approaching multiple banks on your own, they’ll compare different mortgage options on your behalf. But what about the rates? Can they really help you get a better deal?
Access to a Wider Range of Lenders
One of the biggest advantages of using a mortgage broker is their access to a broad range of lenders. While many borrowers tend to approach their own bank or a high street lender, mortgage brokers have connections with many more lenders, including smaller banks, building societies, and specialist lenders who may offer better deals.
Some lenders work exclusively through brokers and do not deal directly with the public. This means that brokers can sometimes offer you access to rates that you wouldn’t be able to find on your own. This wider access can give you a better chance of finding a mortgage rate that’s more competitive than what you’d get by sticking with just one or two lenders.
Do Mortgage Brokers Negotiate Better Rates?
Mortgage brokers can often secure better deals for their clients, but this doesn’t necessarily mean they’re negotiating rates in the traditional sense. Lenders tend to set their interest rates based on the market and the level of risk they associate with each borrower. What brokers can do, however, is match you with the lender that offers the best rate for your specific circumstances.
For example, if you have a higher loan-to-value (LTV) ratio, or if you’re self-employed, finding a lender that specialises in your situation could mean getting a more favourable rate. Brokers understand the lending criteria of various banks and building societies, and they use this knowledge to pair you with the right lender—saving you money in the long run.
Understanding Whole-of-Market vs. Tied Brokers
It’s important to note that not all mortgage brokers have the same level of access to lenders. There are two types of brokers: ‘whole-of-market’ brokers and ‘tied’ brokers.
Whole-of-market brokers: These brokers are independent and have access to the full range of mortgage products available in the UK. They’re not restricted to a particular set of lenders, so they can offer you a broader selection of deals and rates. Here at HLC, we have access to the whole of the market.
Tied brokers: These brokers work with a specific panel of lenders, which may limit the range of mortgage products they can offer. While they may still find you a good deal, their options are restricted, meaning they may not always have the best rate available in the market.
If getting the most competitive rate is your priority, it’s worth seeking out a whole-of-market broker, like HLC Mortgages, who can provide you with access to all the available mortgage deals.
Are Broker-Only Deals Better?
Some mortgage lenders offer deals that are only available through brokers. These are often referred to as ‘broker-only’ or ‘exclusive’ deals. Lenders use these deals to attract more business through brokers, and in some cases, these can be more competitive than the rates offered directly to the public.
Broker-only deals can be particularly advantageous if you have unique or complex financial circumstances. For instance, if you have a less-than-perfect credit score or if you’re looking for a buy-to-let mortgage, a broker might be able to access lenders who specialise in these areas and offer better rates than mainstream lenders.
The Broker Fee: Is It Worth It?
One of the main concerns people have when using a mortgage broker is the fee. Brokers typically charge a fee for their services, although some earn commissions from lenders instead. The fee can range from a flat fee to a percentage of the loan amount.
While paying a broker fee might seem like an added expense, it’s important to consider the potential savings a broker can help you achieve through a lower interest rate. Even a small difference in your mortgage rate can save you thousands of pounds over the life of your mortgage. If your broker is able to secure a deal that saves you more than their fee, the service is undoubtedly worth the cost.
Additionally, many brokers offer a ‘no deal, no fee’ service, which means you only pay if they successfully secure a mortgage for you. This can give you peace of mind knowing that the broker is incentivised to find the best deal possible.
Tailored Advice and Expertise
A mortgage isn’t just about the rate—it’s about finding the right mortgage product that fits your unique financial situation. A mortgage broker can offer valuable advice on a range of mortgage-related factors beyond just the interest rate. They can help you understand the difference between fixed-rate and variable-rate mortgages, advise you on the best term length, and even explain how overpayments can impact your loan.
Because brokers work in the mortgage market every day, they’re often aware of trends, upcoming changes, and unique opportunities that the average borrower might miss. This expertise can be invaluable, especially for first-time buyers or those with more complex borrowing needs.
Conclusion: Do Mortgage Brokers Get Better Rates?
The short answer is yes, mortgage brokers often can get better rates, but it’s not just about the interest rate alone. Brokers have access to a wider range of lenders, including those with exclusive broker-only deals, and they can match you with a lender that’s best suited to your financial circumstances. This can result in lower monthly payments, better mortgage terms, and ultimately, significant savings over the life of your loan.
In addition to potentially securing a better rate, mortgage brokers offer tailored advice and expert guidance to help you navigate the mortgage process. If you’re looking for the best deal, it’s worth considering a broker who can open the door to options that may not be available to you directly.
If you’re ready to explore your mortgage options, our team of expert advisors are here to help. We can guide you through the process and ensure you get the best deal for your individual needs. Get in touch with us today to start your mortgage journey with confidence.