Your Mortgage Broker – A Reformed Character?

If you haven’t been to a mortgage broker lately you might be feeling a bit apprehensive. It always used to be easy for a mortgage broker to blind you with science. The brokers were the experts and you just had to accept what they said. Plus anyone could be a mortgage broker and you weren’t sure how qualified they were.

Nowadays it’s very different. Since 2004 the mortgage broker profession has been strictly regulated by the Financial Services Authority. There are a number of requirements in place, which mean that mortgage brokers have to be more user-friendly, and also you know exactly what you can expect from them.

• Nobody can set up as a mortgage broker without being registered with the FSA. You can check that a broker is registered by looking on the FSA web site.
• One problem before regulation was that mortgage brokers could use all sorts of jargon that was difficult to understand, and could also use different terms for the same thing. This could be very confusing, and contributed to you feeling at a disadvantage. Now there are standard terms that mortgage brokers have to use, so that you know exactly what they are talking about. For example, the sum of money the lender might charge you for repaying your mortgage early could be referred to as a “settlement fee”, “early repayment penalty”,”tie-in”, or “redemption fee”, etc. The standard term now is “Early Repayment Charge”. Again, the one-off payment that many lenders charge you if you are borrowing a high proportion of the value of the property could be referred to as “Mortgage indemnity premium”,”Mortgage indemnity guarantee”,”Additional mortgage security”, etc. Now the standard term “Higher Lending Charge” has to be used.
• When you first contact your mortgage broker, he/she now has to provide you with a document called a Key Facts Document or an Initial Disclosure Document (IDD). This to make absolutely clear what service the mortgage broker is providing e.g. whether their service is fee-based or commission-based, and how many lenders they have access to.
• When the mortgage broker selects a mortgage for you, he/she has to provide you with another document called a Key Facts Illustration (KFI). This summarises the facts about the mortgage – such as type of mortgage and interest rate – plus it has to explain why that mortgage is considered the appropriate product for you.

As you can see, your mortgage broker can’t slip anything past you! You can consult a mortgage broker with confidence, knowing that everything will be made completely clear.
If you haven’t been to a mortgage broker lately you might be feeling a bit apprehensive. It always used to be easy for a mortgage broker to blind you with science. The brokers were the experts and you just had to accept what they said. Plus anyone could be a mortgage broker and you weren’t sure how qualified they were.

Nowadays it’s very different. Since 2004 the mortgage broker profession has been strictly regulated by the Financial Services Authority. There are a number of requirements in place, which mean that mortgage brokers have to be more user-friendly, and also you know exactly what you can expect from them.

• Nobody can set up as a mortgage broker without being registered with the FSA. You can check that a broker is registered by looking on the FSA web site.
• One problem before regulation was that mortgage brokers could use all sorts of jargon that was difficult to understand, and could also use different terms for the same thing. This could be very confusing, and contributed to you feeling at a disadvantage. Now there are standard terms that mortgage brokers have to use, so that you know exactly what they are talking about. For example, the sum of money the lender might charge you for repaying your mortgage early could be referred to as a “settlement fee”, “early repayment penalty”,”tie-in”, or “redemption fee”, etc. The standard term now is “Early Repayment Charge”. Again, the one-off payment that many lenders charge you if you are borrowing a high proportion of the value of the property could be referred to as “Mortgage indemnity premium”,”Mortgage indemnity guarantee”,”Additional mortgage security”, etc. Now the standard term “Higher Lending Charge” has to be used.
• When you first contact your mortgage broker, he/she now has to provide you with a document called a Key Facts Document or an Initial Disclosure Document (IDD). This to make absolutely clear what service the mortgage broker is providing e.g. whether their service is fee-based or commission-based, and how many lenders they have access to.
• When the mortgage broker selects a mortgage for you, he/she has to provide you with another document called a Key Facts Illustration (KFI). This summarises the facts about the mortgage – such as type of mortgage and interest rate – plus it has to explain why that mortgage is considered the appropriate product for you.

As you can see, your mortgage broker can’t slip anything past you! You can consult a mortgage broker with confidence, knowing that everything will be made completely clear.

Sean Horton is a Director of Enhanced Wealth Limited who are a specialist mortgage broker