Can I Work with Two or More Mortgage Brokers at the Same Time?
It is no secret that getting a mortgage for most people is stressful and some find it extremely difficult to obtain one.
This has created a trend of using more than one broker to get a mortgage the misconception is that if one broker fails to get a mortgage, another will.
Mortgage brokers can be invaluable for helping you get the mortgage you want, and in theory, there is no problem with engaging multiple brokers.
But there are a number of drawbacks that are often overlooked this guide looks at both the positives and negatives of using more than one mortgage broker to get your mortgage.
What is a Mortgage Broker?
A mortgage broker is essentially a third-party adviser that can access mortgage products and provide advice specific to your circumstances.
Some brokers are linked directly to a single lender while others have a panel of lenders, they can place business with.
You should aim for a whole of market mortgage broker wherever possible as these mortgage brokers have access to a full range of mortgage products across the whole of the UK market.
A mortgage broker has a specific qualification called the Certificate in Mortgage Advice and Practice (CeMAP) that allows them to give you mortgage advice and process mortgage applications.
The Mortgage Broker Process
When you speak to a mortgage adviser, they will conduct a ‘fact find’ which is a questionnaire that looks at your income and expenses as well as your mortgage goals.
Once this is completed, they will take this information and compare it to products on the market looking for the mortgage that is most suitable for your situation.
After finding a product they will make a recommendation and provide a Key Facts Illustration (KFI) which outlines the mortgage they’re recommending.
If you’re happy with the product you can get a Decision in Principle (DiP).
A DiP is a provisional acceptance from the lender to say they will accept you for a mortgage subject to application.
When searching for a property, estate agents and vendors may require a DiP if you want to make an offer on a property.
Once you have found your property, you can progress to a full mortgage application which your broker will complete on your behalf.
The broker will then oversee the mortgage application once it has been submitted and help troubleshoot any problems that crop up along the way.
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What is a Financial Adviser?
A financial adviser holds a different financial qualification called the Diploma for Financial Advisers (DipFA).
Part of this qualification covers a portion of the CeMAP qualification mentioned above but in order for a financial adviser to provide mortgage advice, they will still need to have completed CeMAP, or equivalent qualification, in full.
Most financial advisers opt not to complete the full CeMAP course as they prefer to provide advice around investments, pensions and other financial products.
If you’re approaching a financial adviser to arrange a mortgage the first thing you should check is that they hold the CeMAP or equivalent qualification.
Can You Work with Multiple Brokers?
You may be thinking that it makes sense to engage multiple mortgage brokers to act on your behalf.
After all, it seems logical that the more brokers you use the more likely at least one of them will be able to get you a mortgage.
The answer to this question is yes you can use multiple brokers to act on your behalf, but the problem is, it might not help you get the mortgage you want and, in some cases, can prevent you from getting a mortgage altogether.
Disadvantages of Using More Than One Broker
The disadvantages of using multiple brokers fall into three categories:
- Credit score problems.
- Brokers that don’t have access to the whole of market vs those that do.
- Potential for multiple broker fees.
There is also a fourth issue where you might receive conflicting advice which could overcomplicate the process and make deciding on the best option very difficult. This fourth issue is especially the case with both credit scoring problems and brokers with limited market access.
Credit Score Complications
When you look for a mortgage, you will be credit scored at least once during the process (upon full mortgage application).
But you may also request a DiP which lenders also perform credit score checks on.
With a typical broker process, this means you will be credit scored at least twice on your way to obtaining a mortgage.
The more brokers you use, the more you will be exposing yourself to additional credit checks.
Credit scoring by lenders is done in one of two ways a soft check (that doesn’t show on your record) and a hard check (which marks your record).
Multiple hard credit checks against your record will have a negative impact on your overall credit score.
This means that if you have approached a broker who has failed to get a mortgage and used 2 hard checks already, your new broker will likely be wary of applying for a mortgage with another hard check.
It might be the case that the lender would have accepted you without the previous hard checks but having those on the record will tell the lender you have been declined elsewhere.
When you consider mortgages are about assessing risk if a lender feels you will be an additional risk because other lenders have declined it could easily lead to further declines ultimately making it a lot more difficult to get the mortgage than it might have needed to be.
Whole of Market Brokers
A common misconception is that a whole of market mortgage broker has access to every lender on the market this is untrue in nearly all cases.
Instead, a whole of market broker has access to every mortgage option across the entire market, so whether you’re looking for a commercial mortgage, residential mortgage or bridging loan they will have at least one lender on their panel that caters for that.
When you approach a broker, it is a great idea to ask how many lenders they have on their panel as this will give you an indication of how broad their coverage is of the market.
Limited panel or select panel brokers may only have a handful of lenders to choose from (and in some cases may be tied to a single lender).
If you find a good whole of market broker with a wide range of lenders, such as Boon Brokers, you shouldn’t need to double up advice from another broker as you will likely find the exercise fruitless.
You will notice in your search for mortgage brokers that many charge what’s known as a mortgage broker fee.
A broker fee covers the advice that a mortgage broker gives.
These fees can be stacked and some charge both advice fees and then a secondary fee when you make an application.
During your initial conversation (before any advice or discussion about your mortgage occurs) a broker must outline their fees to you and at what stage they are charged.
Fees typically range from £250 to £500 but some brokers charge a lot more and we have seen broker fees up to £2000 being charged.
When you use multiple brokers that charge fees you will likely find your costs escalating needlessly as the advice received between the brokers shouldn’t be materially different.
Boon Brokers is a fee FREE whole of market mortgage, insurance and equity release broker.
By using a broker that doesn’t charge a fee and has access to a large range of lenders you have no reason to worry about employing the services of multiple brokers.
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Advantages of Using Multiple Brokers
In rarer circumstances, you may find that using more than one broker is beneficial, especially if the mortgage you’re looking to obtain is unusual or if your circumstances are trickier than most.
Backup for Failed Mortgage Applications
Sometimes you will find that you go through a series of different lenders with the same broker, and this can be frustrating, time consuming and in some cases costly.
A broker shouldn’t be making an application unless they have a high level of confidence that a mortgage application will be successful.
Some brokers unfortunately don’t do enough research about lenders and make their way progressively down a list of the lenders they think will be suitable for you.
In these cases, if you have a separate broker that completes the work properly it can save you a lot of hassle and time because they will be able to find a lender that is suitable where the other broker did not.
It is important to note that once an application is submitted and a broker has looked at the criteria thoroughly, it will be out of their hands to a large degree.
That means if something untoward comes up after the application like an unknown debt or property defect, it can cause a decline without the broker having any power over the situation.
Using a reputable broker and disclosing every detail of your circumstances to them will help mitigate this risk and again mean you shouldn’t need to use more than one broker.
It May Be Cheaper
This might sound counter-intuitive especially if you’re using multiple brokers that charge fees.
But the fact remains that brokers have access to different lenders and products and one broker might make a recommendation that is cheapest from their panel only to be beaten by another product from the second broker.
If you have been given the details of a product from one broker and you feel it is too expensive or not to your liking in some way, you can ask that broker if that is the best product they can source.
If they confirm it is the best available to them, it is harmless to approach a fee-free broker like Boon Brokers and see if we can beat the existing product that you have been provided.
How Do I Choose a Mortgage Broker?
There are several things you should check when choosing a mortgage broker.
Are they whole of market?
It is almost always preferable to seek out a whole of market broker unless you’re specifically looking at a building society that has a product only available in your local area.
With that said most building societies make their products (even location specific ones) available to whole of market brokers.
Are they regulated by the FCA?
Unfortunately, there are still brokers and financial advisers that operate illegally.
The FCA provides a register of all companies authorised to operate as well as a list of companies that have come to their attention for conducting business without the correct regulation.
What fees does the broker charge?
A mortgage broker in the UK must make you aware of the fees they charge BEFORE they have any kind of discussion about your situation and give any advice.
If you’re speaking over the phone this is normally part of the information they provide at the beginning of the call explaining their regulation requirements.
Most fee free brokers will also explain they don’t charge a fee for their services and explain that they’re paid a commission for arranging products.
Do they have access to DEFAQTO insurers?
This is sometimes overlooked but shouldn’t be. Brokers need to arrange insurance products often when arranging your mortgage.
Most life insurance providers are DEFAQTO rated, but some home insurance providers aren’t or have poor scores.
DEFAQTO is a body that grades insurance products out of 5 stars.
The areas they look at are important like claims pay outs and processes, product definitions (the more customer friendly the better) and also customer experience.
You may have noticed DEFAQTO scores when using comparison websites, and something that probably stands out about this is that cheaper insurers tend not to have great scores (or any scores at all).
Using multiple brokers can be advantageous especially if you have already used a broker that isn’t whole of market and they’re struggling to provide you with a mortgage.
But, in most cases it is best to vet your broker upfront and use a whole of market broker with an exemplary reputation.
Boon Brokers is a whole of market mortgage, insurance and equity release broker. Boon Brokers provides fee FREE mortgage advice.
Contact Boon Brokers if your current broker is unable to find a suitable mortgage for you. Or, if your existing broker charges client fees, why not check if we can offer the same product (or better) for free?