When applying for a mortgage in these current economic times is it better to use a broker or not?
I work for a estate agents and there is a mortgage broker we use a fair bit and I approached them personally for a mortgage quote for my fiancee and myself.
I felt that in the current climate where banks arent exactly rushing to give out mortgages ,that the best way to get one was to approach a broker that I knew and who would already have a existing relationship with the banks . The brokers have a added incentive to get you a mortgage .The brokers have secured MIP from 3 banks.
However my fiancees family feel that its better to ignore a broker and just approach a bank direct.
I personally dont think that walking up “cold” to a bank and asking somebody that doesnt know you a mortgage is going to be as effective as using a broker. (ive also been told this in work)
The bank official almost certainly wont know u and while you may have all the necess docs , I think that having the additional benefit of a “reference” from a broker will make a huge difference.
What are the thoughts of other people ?
Well firstly welcome to the pin . Now I would suggest that you surely approach your own bank who will already have a relationship with you…Certainly you have nothing to lose by asking a mortgage broker also as they might have contacts/ products which will suit you better. Just make sure that you do not find yourself with mortgage that you cannot afford ( eg budget for a reasonable payment bearing in mind that interest rates very possibly will go up). Also bear in mind that with the state of the economy property prices are likely to fall back to pre-bubble era prices… and you don’t want to get into a negative equity situation, or find out that in a years time you have over paid both in price and stamp duty etc… You will be paying a mortgage for a LOOOng time so it is a very crucial decision to get it right… Hope that helps.
As with all sellers of financial products, you need to be aware of who they are tied to and what they get paid for promoting a particular product. A bank can only sell you its products. On the one hand, if the bank give you advice on a product, you have some comeback with the bank if it goes wrong, on the other, if you go with a bank you are unlikely to get the best deal - banks have traditionally been the most expensive way to buy anything (don’t I know with an expensive personal pension !).
You also need to decide what you want - fixed or variable rates, how long fixed for and how much to escape, what the interest rate will be when you come off fixed, cost (if any) of making lump-sums, etc. Some of these you may know (roughly speaking), others you will have to find out. Mortgage brokers should be a good way of going through the terms and conditions of different products.
Finally, this being the 'pin and all, would you not consider renting for a while?
and obviously pro-broker, I do think that brokers vary, banks have a McMenu and stick to it well, brokers - assuming you deal with one that has 5 or more agencies - give wider choice, we don’t deal with some banks which is an issue and obviously you’d want full disclosure of commissions due from various lenders so you are not lead on that basis.
@yoganmahew - we’ll have the report out during the week! should be downloadable from the mortgage blog, just puts into hard numbers the ‘invest in property or not’ question. Looks at how property would perform over 5yrs compared to deposit, factors in taxation etc.
bear in mind that some lenders are not available through brokers. (EBS, for example, if I recall correctly)
you should be wary that the broker is not pushing you towards a lender that pays most commission.
Once you know what you want its worth using a broker as they will help with the admin (if you go straight to most banks you wont get a better deal), think about using one that will part-refund the commission to you , it could be worth a few thousand euro on a big mortgage.
Do your homework and talk to both parties but make no commitments to either until you have doen the numbers so to speak, banks are not in the business of helping people they are in the “making priofit for their shareholders business” if they actually help someone its merely a side affect.
Also over the last number of years the relationship you had with your bank has gone out the window in favour of lax lending attitudes and targets for lending officers although this will likely return in the coming years.
Lastly if you want good advice talk to an Authorised Advisor who can give you broad based advice and are not required to have an agency with a company to give advice on their products but may charge a fee, also if you ring the regulator they will give you a list of Authorised Advisors in your area.
By the way Im a broker for the sake of disclosure.