When we are looking to buy a property or remortgage, we are often told “go see a mortgage advisor” but what does a mortgage advisor do? It is a fair question as in today’s world everything is online and easily accessible to most.
So here I am going to dive into a little detail around the role a mortgage advisor plays in assisting people to get their mortgage. There will always be unanswered questions, or maybe clarity is needed on a particular answer, so if you do require any assistance, please feel free to get in contact and ask, I will be more than happy to answer any questions.
What does a mortgage advisor do?
In the simplest terms I can put it ‘A mortgage advisor considers an applicant(s) full financial and personal situation combined with financial understanding, in order to recommend the right product to suit the applicant(s) needs while obtaining the best rate.’
To break that down a little:
Consider an applicant(s) full financial and personal situation
As a mortgage advisor we will want to build a full picture of your financial situation, this covers everything from, latest bank statements, pay slips, credit reports, outstanding credit commitments such as personal loans and much more.
The reason we need this information is to offer the correct advice and recommendations to you. For example, as an advisor I can’t tell you how much you can borrow without first knowing what outstanding credit commitments you have, knowing your salary or income can give a rough estimate but outstanding credit commitments will in most cases reduce the amount you can borrow.
The same example also works for your personal situation, if you have two young children then this is again going to affect the amount of money you can borrow.
Financial understanding
Assessing financial understanding is important for potentially recommending certain products that offer a lot of flexibility around repayments and payment holidays etc and can be good if you are smart in the way you use these features, but if someone has a poor understanding and struggles in this area it would not be fair to recommend.
On top of this as an advisor it is my job to ensure all my recommendations are understood, so I will take this into consideration when presenting my recommendation for a particular mortgage.
Did you know that in a recent study 73% of people fell below the benchmark for financial literacy based on 10 questions.
In order to recommend the right product to suit the applicant(s) needs while obtaining the best rate
An advisor will take all the information gathered and decide on what product is best suited for your needs, for example a fixed rate mortgage for 5 years over a tracker rate mortgage for reasons x y z.
Then your advisor will search for the best rate they can get you on that chosen product, I am personally a whole of market mortgage advisor so will search through 50 + lenders to find the best rate.
Difference between mortgage advisor and broker?
There is no difference! All mortgage advisors must be qualified to give advice and we all will have access to lenders to get you a mortgage offer.
The only difference will be the number of lenders we have access to, if you go directly to a bank and speak to their advisor, they will only be able to offer you a mortgage with the bank they work for. If you go to a whole of market advisor, they will have access to multiple different lenders where they could get you a mortgage from.
Why use a mortgage advisor?
It is a good question and there are a few reasons why I think everyone should use a mortgage advisor.
- Professional advice for peace of mind
- Can save a lot of time.
- Can save a lot of money.
- Can reduce additional stress.
Buying a property and the accompanying mortgage is the most expensive item most of us will ever purchase, so in my opinion getting professional advice is a very good route to take so you can be confident you are aware of all your options.
It can save you a ton of time, if you are having to compare rates between all the different lenders, then having to check with these lenders to see if they will lend you the amount you require, then ensure their criteria fits your circumstances it can quickly take up a lot of your time. A mortgage advisor will have access to software that does the majority of this at the click of a few buttons.
A mortgage advisor can potentially save you a lot of money, particularly a whole of market adviser. We can check multiple lenders at once and have access to lenders who are only available via a broker.
Stress always runs high when it comes to mortgages, whether you have found your dream home and worrying about not being approved, or your looking for a further advance to fund your dream extension, it is not just the mortgage that is going to stress you out, builders, solicitors, estate agents etc, so why not let a mortgage advisor alleviate some of that by helping you get the mortgage you require.
How do mortgage advisors get paid?
There are a few ways in which mortgage advisors get paid, not all methods of payment apply to all mortgage advisors. The main methods are:
- They charge a fee to the client.
- They receive commission from the lender.
- They are an employee and receive a salary.
How much do mortgage advisors charge?
Every advisor is different, however the charges (if any) must be made clear to you prior to you deciding to use a mortgage advisor.
I personally do not charge a fee; I make my money solely from commission from the lender.
Other mortgage advisors charge a fixed fee. Some mortgage advisors require the full free upfront, some charge half up front and the remaining once they put in the application, some charge a fee only when they get you a mortgage offer.
The main thing to note here is you will be told the fee prior to deciding if you wish to continue with the mortgage advisor, even if they are a fee free mortgage advisor like me you will be advised of this in writing prior to continuing.
Mortgage advisor appointment
From your perspective the appointment with your mortgage advisor is for you to explain what you want and/or need. From the mortgage advisor’s perspective, it is to understand these wants/needs and ensure we have all the relevant documents required to make the right recommendation and application.
The meeting itself is very relaxed (well my ones are anyway). It is a case of carrying out a ‘fact find’ which is your advisor gathering all the relevant information from the client(s) such as salary, age, address, full name etc.
This ‘fact find’ is tedious and can be extremely boring, personally I will send a link to you prior to the meeting where you can fill out a lot of this information yourself which saves a lot of time within the meeting as I don’t have to read the questions and then fill out the answers which leaves us time to talk about your requirements.
The bonus about this is it also gives me an opportunity to review a lot of information prior to the appointment and can potentially enable me to give more detailed advice in this meeting.
Your mortgage advisor will in most cases also send you a list of documents they require you to bring to the meeting or send over prior to the meeting, again this gives us as advisers an opportunity to review everything before the meeting and start building a picture, it also means we can be in a position to move to an application much faster as we already have all the required documents.
Once the ‘fact find’ is completed you will have a conversation with the advisor who will be asking various questions around your future plans and any expected upcoming changes within employment etc essentially building the full picture, towards the end of this meeting the advisor should be able to give in most cases a fairly accurate indication of the amount you can borrow and range of interest rates available.
After this meeting the advisor will spend some time researching the best product and lender for your needs and then arrange a follow up meeting to explain the recommendation and the reason behind their choice.
Mortgage application process
Once you are ready to proceed with a mortgage application the mortgage advisor will handle this and complete it on your behalf. All the information and documents you provided prior will be used to complete the application. Your advisor will check before applying that you still meet all of the lender’s criteria which will give you the maximum chance of approval.
Once the application is submitted the lender begins to start going through the application and all supporting documents to ensure you meet their requirements, they may contact the mortgage advisor to clarify certain information, or they may require further documents. This part of the process is commonly referred to as ‘underwriting’.
The lender will also instruct a valuation to be carried out on the property related to the mortgage, this is to ensure the property is worth the money you wish to borrow against the property. It is important to note if the lender deems the property to be worth less than the price you have agreed to pay, they will only lend up to the value that they believe it is worth.
Valuation is back and underwriting has been completed, the lender will then issue a mortgage offer providing they are happy with everything, this offer is normally valid for 6 months, an expiry date will be included in the mortgage offer.
Mortgage application timeline
From submitting a mortgage application to receiving a mortgage offer can take anywhere between 1 week – 8 weeks.
There are a lot of variables that can delay a full mortgage offer, but most lenders do give an estimate of how long the average wait is for a full mortgage offer, however it is just an estimate.
What can delay a full mortgage offer?
- Lender requires more documents.
- Valuation gets delayed for various reasons (For example – Seller delays access)
- Lender has a high workload.
- Valuation finds an issue and requires further investigation on a matter.
Hopefully now you have a much better idea of what a mortgage adviser does. A good advisor is there to support you through the process and get you the best mortgage available to you.
You will likely be speaking to your advisor on and off throughout the whole process of buying a house so it is important to choose an advisor who you actually like, if you contact an advisor and you just don’t get on for whatever reason you may be best placed to look for another advisor, it isn’t always personal sometimes people just don’t see eye to eye.
If you have any more questions, please don’t hesitate to get in touch with me. I am always happy to answer questions and offer free advice where possible.
