Should I use my estate agent’s mortgage broker?
“I’m being pressured to use the mortgage adviser by the estate agent I’m buying through” is something we hear quite a lot from clients. So we thought we’d explore the pros and cons of finding yourself in this situation.
Nobody likes a hard sell, but knee-jerk reactions aside, might this be a good idea? Well, it depends, on quite a lot of things actually…
Should I use a broker at all? If you were planning on arranging a mortgage yourself, or you’ve only made preliminary enquiries, then most brokers should save you time and money. However in this article we’re looking specifically at the merits or otherwise of going with the estate agent’s broker, versus someone totally separate from the process.
Are my best interests protected? – All FCA regulated firms and mortgage advisers are required to protect your data and confidentiality, but can you rely on the mortgage adviser working in your best interests? They might be sat in the same office as a colleague who gets a commission for selling a property at the highest price possible and this might present a conflict of interest – does the mortgage adviser just say you can afford it? Or might they be tempted to let on your maximum buying power?
You might want to ask whether you’re being offered an ‘in-house’ service or an offer to be referred to a trusted third party. Most of the big chain estate agents will have their own employed advisers, but often smaller chains and local independent agents will have introducer arrangements with local firms, which may have been subject to a careful selection and monitoring process. At Mortgage Medics we work with a select number of local independent estate agents on an ‘arms-length’ basis, so there’s a clear separation and protection of the buyer’s best interests.
Will I stand a better (or worse) chance of securing the property? – The Trading Standards / Property Ombudsman Code of Practice for Residential Estate Agents is very clear on this; it says agents must not “discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide related services to them.” That said, if you’ve already had a meeting with an agent’s broker, it’s not unreasonable to suggest that if they know the type of property you’re looking for, and that you have a mortgage agreed in principle (AIP) then perhaps you should rightly be one of the first people they call to offer a viewing to.
By law agents are required to put all offers to the seller of the property as soon as reasonably possible, so legally speaking you should be treated fairly. In practice we know that some agents don’t abide by these rules and potential buyers are sometimes told explicitly they’ll have a better chance of securing a property if they use the agent’s in-house mortgage broker. If you experience this treatment, you can report it, or call the agent out at the time, but you might feel that ‘rocking the boat’ could harm your chances of securing the property, even though it shouldn’t.
Will I still get the best deal? If you’re tempted to meet with the agent’s broker then do the sort of due diligence you would on any company, search online for reviews, ask for their terms of business or “Initial Disclosure Document” which will explain whether they can use any lender or are restricted to a reduced number or ‘panel’ of lenders. It should also show how they’re paid and what fees they might charge. Some estate agents recommend excellent mortgage brokers, whilst some recommend those with more problematic review scores, which could be a red flag.
Conclusion – Like any industry there are good mortgage brokers and not so good ones, but if you feel under pressure, that could be a bad sign, so take a step back and assess your options carefully. At Mortgage Medics we always recommend the first step of buying a property is to speak to an independent mortgage adviser – don’t leave it until you’ve found a property. We’d love that to be us, but if it’s not make sure you ask the important questions:
- Are they well reviewed?
- Are they independent and whole of market?
- Are their fees clear and fair?
If you’re looking to become a homeowner, move house or get a better deal on your existing mortgage we’d love to hear from you. Get in touch and we’ll be help you understand what’s possible, or sign up to our monthly newsletter, to keep your finger on the pulse.
Sources
Trading Standards / Property Ombudsman Code of Practice for Residential Estate Agents: https://www.tradingstandards.uk/media/documents/commercial/codes-of-practice/tpo-sales.pdf