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Securing a mortgage is a significant financial step in life, often requiring careful consideration and expert guidance.

In the United Kingdom, prospective homebuyers have two primary routes to explore when it comes to obtaining a mortgage: they can either go directly to a bank or building society, or they can enlist the services of an independent mortgage broker.

Each approach has its distinct advantages and considerations, which can significantly impact your mortgage experience and the outcome.

In this comprehensive guide, we will delve into the differences between working with an independent mortgage broker and going directly to a bank to obtain a mortgage, helping you make an informed decision in your quest for the perfect home financing solution.

What is an Independent Mortgage Broker?

An independent mortgage broker is a licensed and regulated professional who specialises in helping clients find the most suitable mortgage product from a wide range of lenders, including banks, building societies, and specialist lenders.

Unlike bank representatives who work exclusively for a single financial institution, independent mortgage brokers are not tied to any particular lender.

Their primary role is to act as intermediaries, connecting borrowers with lenders and providing expert advice tailored to individual needs.

Roles and Responsibilities of a Mortgage Broker/Advisor

1) Market Research

Independent mortgage brokers have extensive knowledge of the mortgage market.

They conduct thorough research to identify the most appropriate mortgage products based on their clients’ unique financial situations and preferences.

2) Offer Impartial Advice

Independent brokers offer impartial advice since they are not affiliated with any specific lender.

Their recommendations are solely based on what is in the client’s best interest.

3) Application Management

Brokers guide clients through the entire mortgage application process, from initial consultation to gathering necessary documentation and submitting applications to lenders.

This reduces the risk of errors and delays.

4) To Provide Ongoing Support

Independent mortgage brokers provide continued support throughout the mortgage process, addressing any queries or concerns that may arise, even after the mortgage is secured.

Advantages of using a Mortgage Broker/Advisor

1) Extensive Choice

Brokers offer access to a wide range of mortgage products from various lenders, providing borrowers with greater flexibility and choice.

2) Expertise and Experience

Independent mortgage brokers are specialists in the mortgage market, offering valuable insights and guidance during the complex mortgage process.

3) Saves you Time and Effort

Brokers handle most of the legwork involved in securing a mortgage, saving borrowers time and effort.

4) Save Money

With access to various lenders, brokers are likely to secure better interest rates and mortgage terms, reducing long-term costs.

Going Direct to Lender

What does it mean to go direct to Lender

Be aware that most mortgages have limits on how much you can overpay without incurring early repayment charges.

These limits are often a percentage of the outstanding balance, typically 10%.

What happens when your go direct to the Lender

1) The Lenders own products only

A bank’s mortgage advisor is well-versed in the mortgage products offered by their institution.

They can provide information about the bank’s specific mortgage options, including interest rates and terms.

2) Lump Sum Overpayment

Bank mortgage advisors evaluate your financial situation to determine your eligibility for the bank’s mortgage products.

They assess factors such as income, expenses, credit history, and outstanding debts.

3) Application Assistance

Bank advisors assist clients in completing mortgage applications, ensuring that all necessary documents are submitted accurately and on time.

They are experts in their bank or Building Society application process.

4) Aware of only their Lending Criteria

Bank and Building Society mortgage advisors provide guidance specific to their bank’s criteria and processes.

This can be beneficial for clients who prefer a streamlined, one-stop approach.

The Key Differences between a Mortgage Broker and Lender

To help you make an informed decision, let’s highlight the key distinctions between these two approaches to obtaining a mortgage:

1) Lender Access

Independent mortgage brokers have access to a wide range of lenders, while going directly to a Lender limits you to that Bank or Building Society specific mortgage products.

2) Impartiality  

Brokers provide impartial advice and tailor recommendations to your best interests, whereas Lender Mortgage Advisors are focused on promoting their institution’s products.

3) Product Choice

Brokers offer a broader selection of mortgage products, potentially leading to better interest rates and terms, while Lenders provide products exclusively from their own portfolio.

4) Market Knowledge 

Brokers stay up-to-date with the entire mortgage market, providing insights into the latest trends and opportunities, while Bank and Building Society Mortgage Advisors primarily focus on their institution’s offerings.

5) Cost Structure

Mortgage Brokers/Advisors may charge fees to clients or earn a commission from lenders, while bank advisors typically do not charge separate fees, as they are salaried employees of the bank.

What’s the best option?

In summary, using a mortgage broker can provide you with access to a broader range of options, expert guidance, potential cost savings, and a smoother mortgage application process compared to dealing directly with a single Lender.

It’s important to research and choose a reputable Mortgage Broker/Advisor with a track record of success.

What’s next?

Speak to a whole of market Mortgage Brokers which can provide you with the specialist Mortgage Advice you need.

We have a range of reputable Mortgage Advisors waiting to take your enquiry, regardless of the complexity of your case.

So, get in touch and see how we can help you.