Why it is better to go to a mortgage broker

When it came to the biggest financial decision of his life, this lovemoney.com writer chose to go to a broker.

Before the credit crunch came along, the best place to get a mortgage was almost always through an intermediary. Many lenders actively targeted the broker market with exclusive, cheaper products than you will find in the branch, resulting in intermediaries accounting for around 70% of all completed mortgages in the UK.

Dual-pricing mortgages

Of course, then Northern Rock happened, and the world has never quite been the same since. The banks started to worry that they would be over-exposed by offering attractive products through the broker market, and decided to focus on their branches instead.

Most opted to dual-price - namely, offering better rates through their own outlets than are available to brokers. Some, such as Bank of Ireland, even took the rather more extreme measure of opting to turn their backs on the broker market entirely.

Why a broker was right for me

So knowing that I would end up paying more by going to an adviser, I must have had a screw loose to actually go through with it, right? Well, not if you believe in the value of independent advice.

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I have written about finance, and more specifically mortgages, for quite a while, so I would like to think I have a decent idea of how the process works. But I was still a first-time buyer, and this was in many ways a step into the unknown.

In addition, no matter how confident I may have felt, I was buying with my other half who had no such background. As a result, the brilliant and honest advice we received from our adviser was invaluable.

As you probably know, here at lovemoney.com, we offer a fee-free mortgage broker service. But I decided to go to a broker some time before I joined lovemoney.com, and my decision was based entirely on my desire to get the best mortgage deal. After all, it was one of the biggest financial decisions of my life.

Mortgage paperwork worries

It was an amazing help to talk through the various facets of the deal - the early repayment charges, the possibility of overpaying - to get a clear picture of what the most important features of a mortgage were for us. It was also helpful to do this with someone who is not obviously desperate to get the deal through to hit some sort of target.

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The amount of paperwork involved with buying a house is mindboggling, particularly if it is your first house, and that is where a broker really earns their stripes, talking you through the process, explaining the often meaningless jargon, and providing a reassuring presence.

In the end, we completed on the property within a month of having our offer accepted, something I believe simply would not have happened without having our broker on the other end of the phone.

The bank branch alternative

The only downside, so far as I can see, is that we didn't get the absolute cheapest rate we could have, paying around 0.2% more than if we had gone to the branch. For some, getting the cheapest deal is the be all and end all for such a decision. And for a day or two, I did genuinely start to wonder if we were doing the right thing.

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Those worries disappeared the second I went to open a joint account with my partner. If I never have to deal with a bank branch again, I will die a happy man. To get this account we had to have a half hour 'meeting' with a branch adviser.

The joint account itself was not mentioned until about 25 minutes into the session, by which point I was daydreaming of being somewhere - anywhere - else than in that branch. They tried to flog us credit cards, personal loans, home insurance, and you should have seen her eyes light up when we mentioned we were buying a house.

We were subjected to two separate advisers trying to convince us to abandon the mortgage we had arranged, and jump on board with them.

Needless to say, three months on the joint account is a nightmare, caused by the bank's incompetence. For example, they spelt my name wrong on the card and cheque book. When I tried to correct this, I failed a safety check because I had the sheer audacity to spell my own name correctly. Worryingly, my experience is far from unique.

The downsides to a mortgage broker

Obviously it is not all sweetness and light if you go to a mortgage broker. It is important to remember that some will charge a fee for their advice, while it is always worth enquiring as to just how many lenders they deal with. The phrase 'whole of market' is fairly redundant thanks to the FSA fudging the issue, but alarm bells should ring if your adviser only deals with a panel of lenders.

Also, by using a broker, you are effectively writing off the prospects of taking a mortgage with lenders like HSBC, who have never felt the need to work with intermediaries.

In the long run, the extra few quid I'm paying by going through a broker is more than offset by the peace of mind I currently enjoy as a result of that broker's help and insight. That, and the fact that I didn't have to rely on my bank to process my mortgage without making a complete hash of it.

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