So here is my first ever blog post, and it is a tough one to write. It can be very rewarding for someone to go in to mortgage brokerage, usually, financially. Personally, while that is a great start, my vision for the mortgage industry is far more value driven than financial, but who would throw away their hard-earned money, right?
In my opinion, a good broker does not like to identify with the term broker. A good broker sees themselves as an adviser first, then they do the brokerage second. “Why is this important?” you may ask. This is why: the first job of a mortgage broker is to give each and every client the best advice they can. This means knowing and often finding criteria which is relevant, understanding the client’s true needs and requirements, understanding the client’s motivations, strengths, weaknesses and what is important to the client as an overall financial assessment and as a matter of personal care. The best advice is not always given on the spot, a lot of times, it requires detailed market research.
Would it be great to go and see your broker for a swift 30 minutes and come out with a deal agreed in principle? Yes. Can it be done if the broker cared enough about you to ask enough questions? Absolutely not. I take significantly longer than most brokers I know in the industry for very good reasons. It is not possible for anyone to complete a full income and expenditure assessment, understand your overall situation, why you have a preference for a certain type of deal (or if you do not have a clue about mortgages and the home buying process talk you through it from start to finish), cover every single disclosure required by law, assess your employment, what protection you need to ensure you are always safe in your home (arguably the most important part of the entire process), ensure you understand everything I have said and actually take the time to listen to you while on each and every occasion given special care as to whether you may be a vulnerable customer over and above the FCA requirements within 30 minutes.
At which point in that 30 minutes did you learn about anything? If it took just 30 minutes and you had not seen that broker before you probably just got grilled on your income, outgoings and employment, a quick question or two regarding your plans (if at all in most cases) and suddenly you have a mortgage agreed in principle and probably a lack of understanding to exactly the deal that if you were to execute it today, you would be signing up for. This, quite frankly, is not good enough.
Having seen many brokers operate it seems to go something like this: get the details taken down, find out who the solicitors are/sell them solicitors, grasp what type of deal will be recommended if possible, see if they want additional surveys done and try to sell a few other bits before you’re back out of the door. This is not the process which people need. People need advice delivered at a pace which is good for them, people need to understand why the broker is asking questions about insurance, or wills, or solicitors, or surveys. Why? Because without this understanding it is absolute that you have not been properly advised you have been sold to and the broker is just transacting for you, not building a relationship which you can trust will always be there to look after yourself and your best interests, even at a cost to the broker because that is their job.
Would you be shocked to hear that most brokers have their favoured lenders and providers? Being in the industry, I am not. What it does, is make me feel sick. If you were to look at the details of why this mortgage or insurance provider has been selected, would it be the cheapest deal that you could access on the market – should it always be the cheapest deal which you could access? Does it meet your needs and circumstances? Have you ever asked why?
From speaking to other brokers, I have heard many disgruntling statements such as “I’ll just tell them they’re s**t.” To which I may retort (and have done) “But they’re not”. Almost any lender is good enough suffice their service level and criteria etc. fits the client’s needs and objectives. Why should you pay extra because the broker couldn’t be bothered to do the research?! Yes. This is exactly what happens, it is nothing short of scandalous. Why should you be advised incorrectly that what you need cannot be done? Is it possible to actually know that given the number of lenders available – usually not. Why would you use a broker working from a panel as small as 8-10 when there are potentially dozens of lenders who are not on that panel who would better suit your needs? All this is doing is costing you money and potentially affecting your circumstances later down the line.
Now, this barely scratches the surface of the issues within the industry. Major brokerages often do not train their brokers to read tax returns and corporate accounts. How can this be acceptable? Should your broker know which figures to use, when to use/apply them and why? Of course they should, but how can this be possible when most brokers do not even understand what they are looking at? This is one of the reasons self-employed people often struggle to get a mortgage. Do you need a specialist mortgage as a CIS contractor, an IT consultant or many other types which people claim to be ‘specialists’ in? No! your broker just needs to be able to read the data provided in your documentation correctly and understand how and when to use it in conjunction with your overall position, this is not specialist, this is the bespoke service every client should get. These mortgages often end up on the high street and often with your own bank or building society. So why pay extra for these ‘specialist’ services?
This is not to say that every person thinking about taking mortgage finance should not still speak to a broker, they should. Why? Because you should be getting advice about your options on the mortgage market rather than just what you could potentially do by going in to your bank or building society – this is all they are allowed to advise on, and usually the first meeting isn’t even with a qualified advisor. Did you know that some lenders will do things via a broker which they would never do in branch? It is always worth getting advice, and often a second opinion to that too. One recent client of mine was referred over, they were dismayed at the work of her previous broker who could not explain why that deal was recommended over and above “it is the best deal for you”, yet, that does not stand to be true as the recommended provider specifically excluded the property type which the client was purchasing. Hardly the “best” now is it?
A mantra to note is that you get what you pay for. Free provision of mortgage advice and brokerage is done in high volumes. Mortgages and protection are transacted for the client as quickly as possible to ensure the income required because they do not charge fees. What does this say to the quality of advice given? Far more than certain (not all) brokerages and brokers would want you to know…