Choosing and using a mortgage broker

You probably thought that, having picked out your perfect house, your decision-making days were over. Frankly, you couldn't be more wrong. It's time to put all thoughts of washing machines and window boxes out of your mind, and focus on choosing something which will probably outlast all your furniture: your mortgage.

Choosing a mortgage has always been fraught, but in recent years the market has exploded. Gone are the days when the major decision you had to make was between a variable and a fixed rate. Now, every lender seems to have their own take on the product, from offset mortgages that set your savings interest against your mortgage interest, to self-certification mortgages for the self-employed and the newest offering from Abbey: a mortgage that pays customers up to 1% of their outstanding mortgage balance every two years. Making sense of all the different options and working out which is best for you is where mortgage brokers come in.

A mortgage broker is basically a financial adviser with specialist knowledge of the mortgage market. He or she will single out the mortgage most suited to your circumstances, negotiate on your behalf with the lender and, ideally, get you a better deal than you could have done yourself, as some brokers have access to mortgage deals that won't be available directly from the lender. All of which sounds great: moving house is a stressful process, and having one less thing to worry about can be a huge help, particularly if it means you'll be better off in the long run. However, as with as with most financial services, a mortgage broker doesn't come cheap. You need to make sure that you choose the right person, and that you get your money's worth when you're dealing with them.

Mortgage brokers, like financial advisers, can be either tied or independent. Tied brokers do not demand an up-front fee but, rather, are paid via commission when you take on a mortgage through them. However, they can only recommend the products offered by the particular lenders to which they're attached. Independent brokers, on the other hand, are free to recommend what they deem to be the best product for you from across the market, in return for an one-off broker fee. The amount varies from broker to broker, but you should expect to pay something in the region of ?200.

When it comes to finding a broker, a personal recommendation from a satisfied customer is, as ever, invaluable. If one isn't forthcoming, you need to start doing some research. Find.co.uk, has a complete A-Z list of the websites of every broker in the UK, while Financelink.co.uk and Mortgages.co.uk also carry comprehensive directories. Hotproperty.co.uk have a search which provides you with a nearest-first list of the brokers in your area when you enter your postcode. Once you've read up on a number of firms, ring around and get some quotes before you commit to anyone.

Before employing a broker, you should check whether he or she is authorised to give advice. The mortgage industry (including brokers) will be regulated by the Financial Services Authority (FSA) from October 31 2004, but for the time being the main regulatory body for the mortgage industry is the Mortgage Code Compliance Board (MCCB). You can check to see whether your broker is registered (and find out exactly what the Code entails) on the MCCB's website.

When you finally have a meeting with your broker, you should be as prepared as possible in order to get the maximum benefit. Before going in, make a list of your circumstances and what you need from your mortgage. Note down your salary and the amount you need to borrow, and have some ideas about the repayment terms you're after, and whether or not you'd be interested in features such as flexible repayment holidays. During the meeting, jot down any salient points and make sure you ask questions if anything the broker says is unclear. Ask him or her to explain exactly why they are advocating a particular product or provider. Afterwards, if you have any further questions, do get back to your broker - they should be happy to help you, or even just provide reassurance if that's what you need.

If, despite all your preparation, something does go wrong, there are steps you can take. Act quickly; in most cases there are time limits on complaints. In the first instance, you should speak to your broker about your complaint and try to resolve matters between you. If that doesn't work, write to your broker's firm; if you're still dissatisfied and your broker is signed up to the Mortgage Code, get in touch with the MCCB. Not only does the Board require all its subscribers to have an internal complaints procedure, it can initiate disciplinary action if your broker refuses to deal with your complaint or is slow or obstructive when doing so.

Finally, if you decide that a mortgage broker is just one expense too many, remember that you can do a lot of research yourself, online. Visit Moneysupermarket.co.uk and take a look at their 'best buy' tables to find the best rates on the market at the minute, or use a mortgage comparison tool such as our own to find a good deal.

Useful links

Financial Services Authority register of authorised providers

Mortgage Code Compliance Board

Find.co.uk

Financelink.co.uk

Mortgages.co.uk

Hotproperty.co.uk