Mortgage advice: should you use a mortgage adviser?

Independent mortgage advisers have a wide knowledge of the mortgages available from different lenders. They can search the market on your behalf and recommend the best deal.

To find these deals on your own involves a lot of research and talking through your circumstances many times with different lenders.

An adviser might also be able to find a deal you can’t find on your own. They can also improve your chances of being accepted for a mortgage as they’ll know which lenders are best suited to your particular circumstances.

This is particularly important if you don’t have a large deposit, haven’t been with your employer for long or if you’re self-employed.

When you get regulated mortgage advice rather than doing research on your own, your mortgage adviser will recommend an appropriate mortgage for your needs and circumstances.

If the mortgage later turns out to be unsuitable for any reason, you can make a complaint. If necessary, you can take your complaint to the Financial Ombudsman Service. This means you automatically have more rights when you take advice. 

Not getting advice means you have to take full responsibility for your mortgage decision.

If you don’t get advice, you could end up:

• with the wrong mortgage for your situation, which would be a costly mistake in the long run
• applying for a mortgage that doesn't fit the lender’s lending criteria.

It’s important to see a mortgage adviser at the start of your mortgage journey whether it’s your first mortgage or you're looking to re-mortgage. It will save you a lot of time and effort in the long run.

It’s good idea to speak to a few different firms to see what’s on offer and to compare fees.

There are two main types of mortgage advisers.

Mortgage advisers connected directly to lenders usually only recommend mortgages from that specific lender.

Mortgage brokers, or independent financial advisers, who can look at a range of mortgages from different lenders. Some might even check the whole market offering you a wider range of products. 

It makes sense to choose a broker or adviser providing a ‘whole of market’ service. This means they can choose from the largest number of lenders and mortgages available.  

However, even ‘whole of market’ advisers don’t cover everything and there are still some merits of going directly to the lender for your mortgage. Some lenders will have exclusive deals only available if you go to them directly which can help you avoid paying any up-front broker fees.

Firms offering mortgage advice must be regulated and authorised by the Financial Conduct Authority (FCA). Details of all regulated firms are held on the FCA’s Register.

• They’ll check your finances to make sure you are likely to meet the individual lender’s lending and affordability criteria.
• They might have exclusive deals with lenders, not otherwise available.
• They often help you complete the paperwork, so your application should be dealt with faster.
• They’ll help you take all the costs and features of the mortgage into account, beyond the interest rate.
• They should only recommend an appropriate mortgage for you and will tell you which ones you’re likely to get.

You can find a regulated mortgage adviser on these websites:

• Personal Finance Society
• Unbiased

It’s also a good idea to choose a firm that’s a member of the Association of Mortgage Intermediaries (AMI), the professional body for mortgage intermediary firms.

Mortgage advisers might charge you for their service, depending on the product you choose or the value of the mortgage. This charge could be a flat rate or hourly rate, or a percentage of the amount you borrow.

Others will be free to you but receive commission from the lender.

Some charge fees and receive commission, but you should be told how an adviser will be paid and all the costs involved in providing the advice. 

The fee can be added to the mortgage, but you have to agree to this first and you will pay interest on the fee as well as the rest of the mortgage, until the whole mortgage is paid off.

When your adviser makes a recommendation, they must give you a mortgage illustration document(s).

The mortgage illustration document outlines a lot of the details about the mortgage you’re being offered. This includes:

• the frequency and number of your repayments
• any fees or charges you have to pay upfront to get the mortgage
• the overall cost of the mortgage, including interest, over the full term
• the rate of interest or Annual Percentage Rate of Charge (APRC), and the type of interest (fixed or variable)
• what happens if interest rates rise and how this affects your repayments
• if there are any special features of the mortgage, such as the ability to overpay or underpay
• if you can make overpayments to the mortgage and any penalties for doing so
• what happens if you don’t want the mortgage any more
• the length of the reflection period (at least seven days, or more depending on the lender).

This helps you understand what you’re agreeing to and is an easy way to directly compare mortgage offers.