We’re first time buyers and one of our estate agents is encouraging us to go with a mortgage broker. What are the advantages and disadvantages of that? Are we tied in with the broker or can we also negotiate with bank separately? Who pays the broker? Do they have any potential vested interests? Any advice much appreciated!
The brokers get commission.
Advantages are that they deal with a pool of lenders and will be able to max out your debt. Which is cool cause then you can buy the best house you possibly can.
Disadvantages? Cant really see any.
Listen, it is not one of OUR estate agents. Estate Agent acts in the interest of himself / herself first and foremost and this generally means in the interest of the vendor. They are paid by the vendor.
Of course, they are encouraging you to talk to a mortgage broker. Why you are even discussing your finance arrangements with them is beyond me, clearly, they are looking to up your offer and if you don’t have a sense of the figures before looking at properties you are in a world of hurt already.
My serious advice is to stop all negotiations, stop looking at properties, go watch Glengarry Glenross and then do some serious boning up on financial transactions and come look at it again in six months.
You know the phrase “vested interests”, but clearly wouldn’t recognise one when it walks up and starts advising you.
Cold shower. Kit kat.
Take a break.
Real Estate Agent recommending a Mortgage Broker.lol…
Ever play Texas Hold em (cards of any type), and if so, do you always tell the other guy what your cards are and more importantly then bet afterwards…
Thats what you are doing…
Barrygolightly you should probably do some research into the basics of mortgages etc., before committing pen to paper. The best decisions are informed decisions. Link below has some independent advice worth reading.
Forget about buying and spend a few months reading this forum.
I wouldn’t use a broker that an estate agent recommends. You run the risk of this estate agent knowing how much you’ve been approved for before you find out.
Given the questions you’re asking, you should also ask if now is the right time to buy.
Go easy chaps, this is someone who is looking for advice first… not asking afterwards if they should have done it.
yeah what a terrible patronising and condescending tone…
Thanks to everyone for the sympathy and good advice!
Have a look here:
You’ll see most of the arguments related to timing rehearsed here.
Have a look at some of the other sell, buy, rent with regard to emotions on a particular house.
The point about using an EA recommended Mortgage Broker is that it can damage your negotiating position, as TUG says above. However friendly the EA, they are not acting for you. Only your solicitor is acting for you in the transaction. Everyone else is out for themselves or someone else (the seller, for example).
Just remember, before you go looking at properties you should sensecheck and sensitivity test your budget versus your likely future incomes (with downside projections, i.e. loss of one job, paycuts), you should also use a long term normalised interest rate, in the order of 5%.
Use jeacle’s mortgage calculator.
Then pick a walkaway figure in your head and make sure you don’t start negotiations with your max offer.
Look carefully at similar properties in the area and whether asking is in line or whether the property is still lagging the market and at least bid 20% under ask in your first offer. Psychologically, unless there is a real difficulty with the vendor and they need to sell, it will be tough to budge them much from 10% under ask but if you’re paying anything closer than that then you are likely not negotiating hard enough.
Don’t forget to budget for extras like legal fees, and make sure any offer you make is conditional on the survey (useless device to knock a few grand off) and mortgage approval of course.
I would check if the mortgage broker and estate agent are related. Maybe they have the same surname or have offices right next door to each other. This sort of thing has happened.
Maybe , they might be known to go for a pint together after work every so often or play golf together.
If you are determined to go ahead then get your own broker, ring the Financial Regulator and ask them for a list of Authorised Advisors in your area then ring them up and ask them do they arrange mortgages and if so with how many banks. Then ask them what they charge and if happy go in and see them but FFS dont go to the guy the EA recommends or you might spend years paying for it.
One slight flaw in this plan would be that the broker is the estate agents mate and will tell him exactly how much he managed to get you. The estate agent will then engage you in a bidding war with a certain Mr. P. Hantom, which, to your relief, you will win, but only by the skin of your teeth mind - you literally could not have gone any higher, because the other bidders dropped out just as you reached your max.
Everybody’s a winner.