Going for brokers

Some things in life you only learn through experience, and taking your first mortgage is a prime example of this. Making a mistake here can be costly and stressful, which is why many people choose to seek some kind of financial advice when deciding how to fund their home. To get the best out of your adviser, arm yourself with the rules of play from the outset.

Financial advisers come in different guises. In November last year mortgages came under the jurisdiction of the Financial Services Authority (FSA) and a month later, the FSA added a third category of advice to the existing two. Now, any mortgage adviser you visit will be regulated by the FSA and will operate under the following headings:

· A tied adviser: these will work on behalf of just one lender, which means they will only recommend mortgages from that lender
· A multi-tied adviser: this new form of adviser will recommend products from a limited range of lenders
· An independent financial adviser (IFA): these work on the client's behalf and will therefore recommend products from across the whole market


Choosing an adviser
Many people are comfortable with their own bank or building society and will be happy to take tied or multi-tied advice from their local branch. "But people should remember that banks are there to provide returns for their shareholders," warns Greg Pogonowski, senior consultant at IFA, Ample Financial Services. "The deal you get will have to satisfy their criteria and may not be the best one for you."

Something else to bear in mind when seeking advice is that unless you go to an IFA the adviser could be independent in one area but not another. For example, although an independent mortgage adviser will seek out a mortgage on your behalf from the whole market, they could to be tied to a limited number of insurance providers. "According to our research, 78% of people taking a mortgage are also sold an associated insurance product," says David Elms, chief executive of IFA Promotion. "So if you are not using a fully-fledged IFA you will need to keep your wits about you."

But Ben Stafford, head of policy at the Association of Mortgage Intermediaries (AMI), says: "It's often best to go with an adviser that specialises in mortgages even if they are tied to an insurance company. You will be presented with an initial disclosure document (IDD) that will make the status of the adviser crystal clear before you make any decisions anyway." You can find an IFA that specialises in mortgages but is not tied in any other area, try IFA Promotion's www.impartial.co.uk.

Paying your way
There are now three ways in which your adviser can charge for their services:

· Fees only: you pay an hourly rate. A 'retainer' may also be agreed whereby you pay a certain amount each year and then get a reduced rate on hours of advice given
· Commission: you do not pay the adviser directly but they receive commission from the lender - typically as a percentage of the loan. However if you pay nothing direct to the adviser, you should expect to pay a higher arrangement fee or interest rate
· Fees offset: the commission fees or the procuration fees received by the adviser from the lender are offset against any hourly rate you pay


Even if there appears to be no charge, you will pay somewhere down the line. Do not be afraid to ask basic questions to ensure you understand exactly how the charging process works. If you want a choice of how to pay, you will need to use an IFA as only they are legally required to offer it.

Dealing with your adviser
These days you can often choose how you would like to carry out the advice process. Firms such as Bradford & Bingley, which recommend mortgages from 25 lenders, offer a telephone and online service. Documents to be signed are sent in the post. Smaller advisers, such as Ample Financial Services, often want to see a client at least once to verify their identity.

"To use an adviser most efficiently it is best to do the groundwork before you find your property," says Duncan Pownall, mortgage development manager for Bradford & Bingley. "This means discussing the size of your deposit, your monthly expenditures such as bills and insurance and what kind of mortgage you want such as fixed or discount. The next time you come in it's then just a case of finding the best product on offer that fits that criteria." You should also be prepared to lay your hands on three months' bank statements, three months' wage slips and a P60.

It's wise to give as much information as possible and to be upfront about any potential problems. "People can fail to tell you of a blip in their credit rating which can also affect the application," says Mr Pownalls. "Basically, the more upfront you are as early as possible in the process, the better." And if there's anything you want to know, ask. Losing your dream home can be heartbreaking. Asking for timescales in advance can reduce the chances of this happening.

If you are unhappy with the service received from your adviser you should first contact the firm to see if the situation can be rectified. If you are still unhappy, you can make a complaint to the Financial Ombudsman Service where limited financial redress is available. For more details, visit its site

Questions to ask the adviser:
· What is your status?
· How much will I be charged?
· How long will it be before I am in a position to exchange on my property?

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