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Banks vs brokers – who’s best?

If you’re in the market for a mortgage but don’t know whether to go direct to a lender or use a mortgage broker, you’re in luck. We’ve weighed up the pros and cons of each so you can make your own mind up.

Direct Dealing

Direct dealing is when you go straight to the lender. You’ll usually deal with a loan advisor that works for the bank or building society, meaning you will only get what your bank offers and no other options.

The benefits of direct dealing

  • Exclusive deals - Banks can offer deals and products that aren’t available anywhere else, even to a mortgage broker. So a good deal could be right under your nose with your bank or building society.
  • No broker fees - You don’t need a middleman to go to-and-fro for you as you’re dealing with the lender direct, which cuts costs for you.
  • Pre-existing trust - You’ve already chosen that bank to look after your finances for a certain period of time and have trusted them to do so. You can hold them more accountable than a smaller business.

The biggest pitfall of direct dealing

  • Only one option - Variety is not the spice of your mortgage’s life as you only get the choices that your building society or bank is offering you. With only one set of options to choose from, there may be a better deal elsewhere you could end up paying more in the long run.

Mortgage brokers

They are professional mediators between potential homeowners and mortgage lenders. These people eat, live and breathe mortgages, so can help prepare your loan application, sort your documents out and get the best deal for you.

They work with different lenders and banks so you don’t have to. Just be aware that there tends to be a mortgage broker fee.

There are 3 types of brokers:

  • Tied brokers - they work with one lender and will only offer you their products
  • Multi-tied brokers - who have access to a few lenders.
  • Whole market brokers - giving you access to all the mortgage deals that are available to them in the UK.

The benefits of mortgage brokers

  • Whole lot of options - If you choose to go with a whole of market broker you get more options. As a person whose job it is to scour the market for deals and products tailored to you, they’ll have the experience and know where to look first to stretch your money furthest.
  • They do the legwork - Brokers take on the stress and time-consuming work for you, doing the heavy lifting on your mortgage applications
  • Expert advice - They can explain what products and deals are available to you in plain English and point you to a lender that’s more likely to approve you, protecting your credit score at the same time.
  • Exclusive deals - Much like a bank who’ll offer their customers deals, brokers have access to deals with lenders that only operate through brokers and nowhere else.

The downsides of mortgage brokers

  • Broker fees - Some brokers charge an extra fee that you have to budget into your savings amongst all the other costs that come with buying a home
  • No direct deals - Mortgage brokers can’t always get you deals from banks for direct customers as they might not have access to them.

In summary

There’s nothing stopping you from using both to maximise your exposure to the best deals and products. Get in touch with your bank and see what the best deal that they can offer you. Then compare it with the deals from a broker.

Try our broker matching service and we’ll find a broker who’s best suited to you.

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