Go direct or use a mortgage broker?

Hi all, first time poster so I hope someone can give some insight.

What are the advantages and disadvantages of using a broker vs going directly to the bank or building society?

If using a broker would I be better off going to someone local... a place where I can do this face to face or one of the bigger online brokers?

Lastly, do mortgage refusals go on your credit record? I seem to remember that personal loan refusals damage your credit record (correct me if I'm wrong).

Hi Felim
In my opinion, I would definitely go through a mortgage broker. Saying that, I'm abit biased as I work in a mortgage brokers!! A broker will hvae access to all if not most of the Lenders out there and will be able to get you the best rate on the market as opposed to just going to 1 Lender. Most brokers dont charge a fee as they get paid commission from the lender once the mortgage draws down. Broker will do all the dirty work for you and all the chasing with the lender dealing with all the docs so I think its much easier that way

Hi Felim,

It depends on your own experience, contacts, and the broker you choose. If you go to a very reputable, experienced broker who is an untied agent (ie is not tied to any one financial institution) you will probably get a very good service.

IMO the better broker's will often charge you a small fee in addition to any commission they may get. Remember that brokers only get commission if they get you a mortgage and you draw it down. Personally I would rather pay my broker and know that they are getting me the best possible deal out there, rather than the mortgage that will pay them the biggest commission.

The advantage to a good broker is that they will know the market - i.e. they will know which bank, if any, would be open to financing someone in your circumstances. They will also be able to locate the most competitive quotes for life and home insurance. I generally find that clients of mine who have been to a good broker are much better informed and have better insurance deals than clients who go directly to their bank.

Having said that there are a few awful brokers out there too, so whatever you decide, look for recommendations!

Best of luck,

Kate.

Welcome to AAM felim,

there are many posts on broker v direct, have a read through this discussion

http://www.askaboutmoney.com/showthread.php?t=113541

and make your own mind up.

If you have the time and understand mortgages fully then you could approach each bank directly. If not you could use the services of a broker.

Your credit history will affect mortgage approval, basically if you have missed a payment and it has been recorded on your Irish Credit Bureau record then you will struggle for approval with one of the prime lenders (main banks). You can order a copy of your record from www.icb.ie

in theory using a broker is best, but as the others say it depends on how good the broker is.
being refused a mortgage will not affect your credit rating.

To help the person make decision:

If the above person was going direct, Is their any order of banks he should go to eg. Should he go:

1. A.I.B
2. Bank of Ireland
3. Ulster Bank/First Active
4. etc etc

or would a broker go straight to easy bank with most commission and less work?

Also a broker seems to use one application and goes to banks with this. Is their a common application form for a person to go to each bank with eg I thinking of position where you have to provide p60 and wage slips, Would a copy do for each till you choose a final bank to give orginal to.

Felim,

A broker can find the angle getting the mortgage approved for you that the bank mighten think of, especially if you deal with a broker with vast experience.

In the current enviroment with the banks not lending, it is like preparing a good CV before going to the bank.

If you havent the knowledge of what way the bank calculate your approval and their criteria you could be pretty much be walking into a mindfield when you go to the banks. A broker will straight away after they meets you, will know which banks will be interested in looking at your proposal.

Once again I am biased cause I'm a broker also but remember that a good broker will do all the hard work for and will be able to prepare your case for you stronger than possibly yourself.

Hope this helps !

There is no correct order to use, it will depend on what type of mortgage the applicant requires. First time buyer, trade up, remortgage or investor.

The profile (occupation, savings, loans) of the applicant is very important these days. AIB may decline a certain person but Permanent TSB would be happy to approve the same person.

Ask your broker at the outset for a list of the commission payable by each bank and then make your own mind up. If the broker advises the lender with the highest commission (but also highest interest rates) then you should question this.

Each bank will have its own application form and declaration to be completed. A broker will use a generic application form to apply to the different lenders.

Also to papervalue,

A broker uses a generic application alright, but unfortunately a client going direct there is a generic application form.

In relation to what bank to start with, it really depends on the structure of your proposal, loan to value, buying a family home or investment, employment status , etc

Hope this helps.

Ask your broker at the outset for a list of the commission payable by each bank and then make your own mind up. If the broker advises the lender with the highest commission (but also highest interest rates) then you should question this.

Good Point- I would not mind paying broker a fee as well as long as they got me the best deal in my interest.

Just recently I know of a person who wanted to get a mortgage by all honest means, no inflated salary, no hidden loans ie everything on the table, They wanted yes/no answer based on totally honest information given.

They went to a broker gave all supporting documenation etc. They told the broker that they would not be renting out a room in house and do application based on salary and small savings. When approval in principle came out, a condition of it was they would rent out 2 rooms? No way the person was going to rent two rooms

Same person rang another bank, and they would have got more approved than broker could get.


To me I would use a broker, as this is the way things seem to work and I understand they have built relationships with certain banks and have connections and may be easier to get money through a broker.

Thanks for all the replies. I guess I'll be checking out some local brokers then.

Hi Felim.. if you have the time, then try few banks direct also

I went with a broker and unfortunately had bad experience with him.. I was promised a 1% discount for first year and got 0.25% discount.. Promised i didnt have to pay indemnity bond and ended up paying it on the 11th hour... etc... so i did have a bad experience... I know others that have had great experience of brokers .. so best get a reference(s) for broker or bank manager where possible.

papervalue said:

To help the person make decision:

If the above person was going direct, Is their any order of banks he should go to eg. Should he go:

1. A.I.B
2. Bank of Ireland
3. Ulster Bank/First Active
4. etc etc

or would a broker go straight to easy bank with most commission and less work?

Also a broker seems to use one application and goes to banks with this. Is their a common application form for a person to go to each bank with eg I thinking of position where you have to provide p60 and wage slips, Would a copy do for each till you choose a final bank to give orginal to.

Click to expand...

If you have a good credit rating, then the best place to start is with your own bank. Banks dont like losing good customers and are always willing to do better deals in order to keep them. They are fully aware that a customer who gets a mortgage elsewhere is likely to take all of their business with them.

My opinion of mortgage brokers is that they rarely get a better deal that you would get yourself going directly, and sometimes they get a worse deal as the bank has to factor in the commission which ultimately comes out of your pocket no matter how it is dressed up. Banks judge you on your credit history, income etc. - a mortgage broker cant change any of this. The issue is whether or not you have the time to make appointments and visit a number of banks, fill forms etc. I am also inclined to believe that if it is a marginal decision, the bank would prefer to meet the customer face to face than deal with them third hand thru a broker.

Hi,
In my case I went to my own bank initially and they didn't want to know me, eventhough I've banked with them for the past 16 years, have re-paid any loansd on time, no missed payments on credit cards etc etc. I was left feeling a little insulted I have to admit when I was asked if my parents could up come up with 40K between what they were willing to lend me and the actual amount I needed.

I ended up going to a broker......who I couldn't fault, he went above and beyond the call of duty and did a lot of chasing of people for me, and to be honest took a lot of the stress of being an FTB out of the whole experience. I'd highly recommend him to anyone so if you want contact details just PM me.

FTB1975

I went to a broker yesterday just to ask some questions about a possible mortgage and I was told that they charge €295 for their service. Would this be a common charge amongst brokers. I just assumed that brokers work off commission?

Some brokers have started to charge an administrative fee especially for the smaller mortgages. Say it's a mortgage of €100,000 through AIB, the commission on this is €500 which could take 3 months to complete. Some people also use several brokers and apply direct to the banks so there can be quite amount of work done by a broker without reward.

By charging the fee up front, it gets rid of tyre kickers immediately which is fair enough. Everyone has the option of going direct to the bank if they wish.

I think the majority of brokers still work off commission though.