Three fifths of mortgage business (82%) now goes through intermediaries (brokers) whilst the buy-to-let sector has grown by 49% year-on-year, according to the 2016 Mortgage Efficiency Survey conducted by IRESS.
The research indicates that intermediaries continue to dominate the mortgage market with more than three quarters of sales going through this channel.
Why are so many homeowners and property investors using Mortgage Brokers to obtain property finance?
“Simply put, since the credit crunch, the criteria of lenders has become incredibly diverse. What works with one lender may not work with another and in correlation with that, an applicants circumstances may be acceptable to one lender but not to another. As a result it is not a case of comparing the market and identifying the right deal by interest rate or by product fees, there are many different considerations and it takes a professional to assess properly” states Howard Bowes, Managing Director of Harvey Bowes Limited.
Using a professional to advise on, or carry out, specialist tasks is certainly not new. Technically a person could do their own conveyancing (although this would not be acceptable where mortgage finance was involved) however, the vast majority of property transactions are transacted via a solicitor. And when it comes to business, the figures are looked after by an accountant. So when it comes to a serious purchase like a property, whether it is a persons own home or an investment, should it really be a surprise that a broker would add value?
Very often, it is not just the advice that makes the difference. Not only can a broker find the right deal and explain why they make a specific recommendation. But also, a good broker will often liaise with the solicitors and estate agents, acting as the go-between in keeping the deal alive and communication flowing.
With property investors, the property is being purchased at a keen price or may hold opportunity to add value and may therefore be attractive to other investors. Or perhaps it is a motivated seller who wants certainty and speed. This is another key area where brokers can help. With their finger on the pulse, knowing which lenders are performing fast and showing real hunger to lend, a broker can identify and inform a property investor of which lenders are most likely to deliver in the required timeframes. This can be critical in making a deal work.
Combined with managing the process, this can save time on getting mortgage applications through to offer and completion. A broker should be able to process documents accurately and swiftly and use their knowledge to make sure the process is as swift as the lender can manage. This often becomes more difficult with smaller broker firms where there is no real administration support, however, professional brokers are set up to deliver with speed and deftness.