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Using a broker can save you thousands

Journalist: Newspage Admin

ended 08. October 2023

For a vanilla client with a good employed income, good deposit and no background issues, sure a broker can compare the market and may find a slightly cheaper deal than your bank or internet research finds. However, it's in the areas above and beyond this scenario where a good broker will save you thousands.

The 2 main areas a broker can save a client thousands of pounds are:

  1. If you have anything adverse or complex in your history, missed payments, income from contracting, foreign income or irregular bonuses, for example, then it comes down to lender knowledge and discussions with lenders to get bespoke underwriting decisions. 

One such example was reported by Simon Farenden Mortgage & Protection adviser at Yellow Brick Mortgages who saw a client that had a few credit issues, just minor stuff, a few defaults and a small CCJ from years ago. They had already been to see an adviser working from a limited panel. The advisor immediately quoted a 5-year fixed with Bluestone at 7.90% fixed. The clients weren’t too happy and felt like he wasn’t doing any actual research for them so they approached Simon and after checking the credit reports and approaching some lenders got them placed with Saffron on their 5-year fixed at 4.77%. They were borrowing 90% for a new build valued at £265k (so mortgage of £238,500) the difference in rate saved them £563 p/m which totals a saving of £33,780 over the 5-year fixed period. A substantial difference indeed, and a great example of how a good independent whole-of-market broker can save you thousands.

 

  1. The second way is when a broker after getting a mortgage agreed for you, will continue to monitor the rates before completion, and if there is a saving to be had, put in additional work to re-apply for a new rate or lender.

One example of the above was reported by Jamie Weavers Mortgage & Protection Consultant at Yellow Brick Mortgages, who met with clients originally in late July, looking for a 305k purchase with a £244k Mortgage (80% LTV). At the time the most cost-effective lender was TSB and an offer was produced mid-august at 6.14% meaning payments £1,365 per month (£32,760 over 2 years). The client was due to complete 23rd October, so Jamie re-checked rates at the end of September and sourced a new rate of 5.74% and received an offer the same day. Monthly payments £1,297.65 total 2 years £31,143.60 meaning a total saving over two years of £1,616.40. Had the client gone directly to a bank, or applied themselves online they wouldn’t have been made aware of the potential saving and would have missed out.

 

Of course, brokers also save clients time, answer any questions, ensure the most suitable products, advise around protection and can even assist with legal paperwork questions and chasing everything through to completion. So using a broker should be a no-brainer for any borrower.

 

Brokers – Please share your examples of big savings you have made recently with clients in the above 2 areas or in other areas so we can expand this piece to highlight the benefits of brokers to all.

7 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
The value of a good broker has never been higher. With a turbulent market and fast-changing rates and criteria alongside such huge variances in the amount lenders will lend to the same client, a good broker can make the difference between buying or not buying, what type of house you can afford and of course how much you pay each month on your mortgage. Brokers also often help clients offer on properties maybe even saving them thousands on the purchase price also. With all brokers not charging for the initial chat and advice, it would be complete madness to not get a professional opinion on your options for your biggest monthly outgoing.
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Platinum
Elliott Culley
Director at Switch Mortgage Finance
Sourced a purchase for a client back in January. Purchase price £460k with a 90% mortgage of £413k. The initial rate secured on a 5-year fixed was 4.85% which meant monthly payments for the client of £2176. Before the purchase was completed, I was able to secure a lower rate of 4.58%, which meant a new monthly payment of £2,095. A saving per month of £81p/m which over the 5 years will save the client £4,860.
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Gary Bush
Financial Adviser at MortgageShop.com
There are a million reasons why using a suitably experienced financial adviser is a much more practical arrangement than attempting to navigate an already tricky mortgage market, particularly at a time when rate chaos reigns. Post-Pandemic the amount of applicants with missed payments on credit commitments or mortgages is huge - it doesn't seem that the UK government recommended mortgage payment holidays had a lot of joined-up thinking in them - with mortgage account holders having these holidays registered as mortgage arrears on credit referencing agencies. Added to this with the tightening of financial budgets affecting households some serious financial analysis is needed a service that UK lenders don't offer with their no-advice offerings.
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Gareth Davies
Director at South Coast Mortgage Services
This is one of our recent examples...

"Always speak to a broker!! A nice success to end the week.

Today we saw the completion for a client who had been refused a new loan by their existing lender, leaving them with a HUGE increase in monthly costs.

They were also needing to raise around £80,000 on top of their current mortgage in order to repay finance taken out to complete home renovations.

With a complex self-employed income structure, along with numerous other 'quirks' to their case, we knew immediately why their lender had said no. However, we also knew immediately which other lenders would say yes!!

Thankfully we were right, and once their new deal completes they'll be saving around £2,500 every month."
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Austyn Johnson
Founder at Mortgages For Actors
This sounds like all of my clients! - we dont even bother going in the front entrance anymore - the computer will say no, we source and then get in touch with them direct, amalgamate the yes's and find the best deal for the client.

Today, for example, a client - complex self employed income and LTD company income with a few future contracts - just had a mortgage agreed for property no longer affordable. Put down a deposit when it was a string on the grass, 1.5 years later and it built with a 20-day exchange req - affordability no longer fits and all lenders are around 30k off. a smaller lender I know, said that we can do it if we jump through a few hoops first. Jumped them and now it's all good.
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James Bull
Mortgage Broker at JB Mortgages
I recently did a product transfer for a client with Halifax. The interest rate was originally 6.2% fixed for 2 years with payments of £1170. The client was extremely worried about this as their previous rate was 1.7% with payments of £700 so was facing a £470 a month increase. As rates have been dropping recently we have been keeping an eye on this for the client and have managed to secure them 5 years fixed at 5.1% which is £1030 a month. The client is hoping rates will drop further and we are proactively keeping an eye on this for them.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Here's one from Amarit Topley, one of our advisors.

"I saw a client who had an AIP but was advised to speak to us by his accountant. The client was a Ltd Company Director but the business had significantly less profit in 2022 than the years before but during the fact find it was established this was due to the relocation of his restaurant and a complete refit. A one off cost.

The rate on offer previously was 8.95% capped at 75% LTV. I approached the lenders who I knew would work from an accountants certificate rather than the tax returns and discussed the situation and reasons for the decline in profits in 2022 and the projections which had been obtained from the accountant for 2023.

I could place him with Accord up to 90% LTV with a rate of 5.54%. Client was looking to borrow £390,000 against a £460,000 property so 85% LTV so not only could the client go for the property he wanted he didn’t need to find another £46,000 towards the deposit as well as saving £36,004 in interest."