Tips to Locate the Cheapest Mortgage Deal

Depending on bank or building society’s mortgage advice is unreliable because they most often try to sell you a mortgage from their own limited range. However, there are ways to get free advice on the best deal and perhaps get cash-back also by using the services of competitive brokers.

First use a whole of market broker to find the right mortgage and use its influence to help you get accepted. Additionally, check some lenders particular lenders yourself to ensure you get the best possible deal. The key is to find the right combination of rate and fees. The following steps will enable you to make the right mortgage decision.


Step 1: Get all possible information on the latest development in the mortgage market. This will help you to have a proper understanding of the way mortgages work. The information can be had from online sites, books and other sources. Before starting, you need a quick idea of what’s available. Existing mortgage holders should see what their current lenders best deal is. However, speaking to a broker is usually a better option than transacting mortgages online.

Step 2: It makes sense to use a mortgage broker. A mortgage broker’s job is to find you a good deal. They also have the advantage of some influence with lenders to ease your acceptance and an extra layer of protection if things go wrong. Thus as you can get this, often for free, it makes sense to use one. The key is to find a suitable broker who will help you to locate the best mortgage deal at the cheapest rate. Choose a broker you like and trust because he is going to be the advisor who will guide you through to the final decision.

Step 3: Ask the broker if he is ‘whole-of-market’

‘Whole of market’ is a technical term which means that when picking out suitable mortgages for you, the broker will compare every mortgage available in the market to find the best deals. They are different from other brokers who operate with a small group of lenders dealing in fewer options to simplify and limit their operational costs.

Step 4: Find out whether the broker is an IFA

If you want help dealing with an underperforming endowment, you’ll need to find a mortgage broker who is also a qualified Independent Financial Adviser (IFA).

Step 5: Find out the sources of the broker’s income

Brokers make their income either through charging a fee and/or commission. Some brokers charge you a fee directly. But it should not be more than around 1%, even for ‘sub-prime’ customers Commission. Also, lenders pay brokers a procuration fee of 0.25% to 0.5% of the mortgage’s value, rising up to 1% for mortgages for those with poor credit. That means on a £150,000 mortgage, brokers typically earn £375 to £1,500. These are fees-free brokers who are satisfied with the commission only.


There’s also a third a third type of brokers who are actually better than the fees-free brokers. These are brokers which charge fees, but then rebate all the commission received. Thus if it is a relatively low fee and the commission the broker gets is higher, then the broker will give you back the fee you had paid. Hence, it will be to your advantage if you accept the service of a cash-back broker after getting a rough estimate of his fee and the size of the commission he is going to get out of the deal.